Okay. Good morning, everyone. I am Jason Russell from the Morgan Stanley banking team. It is a pleasure to welcome Charlie Gayer here from BioCryst. Newly appointed CEO of BioCryst. I think he took the job on January 1 of this year. We are excited to have BioCryst here. It is obviously very topical given some of the recent news, and I think we will get into that. Charlie, thanks for being here.
Thanks, Jason.
Maybe just to set the stage for a minute. As I mentioned, you started as the CEO a long time with BioCryst, but started as CEO at the beginning of this year. It kind of feels like BioCryst is entering a new chapter. Obviously, ORLADEYO, which is the underpinning of the business, is a scaled commercial franchise generating operating profit. You took the step to bring in another asset with navenibart just a bit ago, which adds a second modality in HAE.
You have another data point coming towards the end of this year with BCX17725, and you also just took moves on your own perspective on how you are going to drive the pipeline forward from here. Maybe with all of that, set the stage. Let us think about your vision. How has the vision for BioCryst potentially evolved, and is that the result of the maturity of the business or other things on your mind? Maybe just set the stage for us here to start.
Sure. Absolutely. Before I start, I will be making, obviously, some forward-looking statements, and those statements have risks, which you can learn about at our website. For those of you who are not as familiar with BioCryst or who maybe were at some point in the past, BioCryst has been around for 40 years, but we are at a very different stage right now, so it is a different company.
For most of that time, we did everything internally, in-house discovery, and we always had some good science, and that got us our drug, ORLADEYO. This year, we made a decision to pivot away from internal discovery because we have become a profitable company, and we think the best way to go forward is through external innovation to build on the success that we have with ORLADEYO, which we will talk about more, and to build a broader rare disease company.
As we look forward a few years, say to the end of 2030, four years from now, we see us with not just ORLADEYO and navenibart on the market, but probably a third product, well over $1 billion in revenue on a very stable cost basis, growing profitability significantly, which we can then plow back into building a broader pipeline through external innovation. We are really excited about where we are at, the strength of our business, and what we have got going in front of us.
Great. There is so much to unpack here, so maybe just to hit the evolution on the planned pipeline point first. You made a decision to shut down some longstanding capabilities around internal discovery you just mentioned. It sounds like you are not retreating from building the pipeline. What changed in your thinking to make that decision? You mentioned the profitability aspect. Which capabilities do you think are core to keeping at BioCryst that do make you differentiated?
The big reason we made that shift is despite our past success, we realized we can just do more by looking at the broader opportunities out there in rare disease when we just were not big enough to do enough internal programs. Balancing the cost, balancing the probability of success, we can do more externally. This year I have been able to build a really strong team. Dr. Sandeep Menon, who is here in the audience, joined as Chief R&D Officer earlier this year with this shared vision of building a pipeline through external innovation.
We added David Jenkins as our Chief Scientific Officer, came over from Ipsen over the summer, and we are building other scientific leaders. We are not pivoting away from science at all. The science we want now is to help us look at this broad set of opportunities out there and find things that we really believe in, limit our risk in what we acquire, and build a pipeline that way on our growing cash flow.
Great. Pull the thread. You've already taken a step. You acquired Astria, which brought in-house navenibart. I assume you would agree that that's a case study for how you want to think about building out the franchise going forward?
Astria was, I would say, a perfect example, not necessarily the example of what we'll do every time. To find something in a space where we know so well in HAE, we probably never will find something exactly like that again. But the benefit of Astria and navenibart, we've got a late-stage asset there, so we're well set on the late-stage side. And the next things that we want to do are balancing our pipeline going earlier, so kind of phase I, phase II assets to complement what we already have. And in the near term, I think that's going to be much more affordable for us as well.
Okay. Great. Let's get into ORLADEYO. It's a franchise that launched over five years ago. I believe 2025 was your strongest year as far as new patient adds. And so far this year, you've seen similar trends. It's kind of an unusual trajectory in some sense. And for rare disease, you often see these more hockey stick kind of launches. HAE is obviously a very unique market, a competitive market as well. I guess, what are the factors at a high level, and we'll pull the onion back here a bit, but what are the factors that have continued to drive demand, and allowed you to grow the franchise sitting here almost six years post-launch?
HAE is a unique space. I think it's an incredible rare disease success story. The fact that you've got, for a patient population of roughly 10,000 patients in the U.S., there have already been 11 branded products approved and I think another five or six in late-stage development, which is amazing. It comes down first to the product, so to have a differentiated product. ORLADEYO is the only oral prophylactic product in the market and has been for the last six years. It started there, but then it really comes down to the evidence around the product. With all the options that patients and physicians have, the number one thing that they want is to control HAE attacks, as you can imagine. So efficacy is super important. What we've been able to show over time is how well ORLADEYO works for most patients.
When patients start on ORLADEYO, 60% of them make it to a year, and that's because they're getting really good efficacy. So it's not a drug for everybody, but it's one that works really well for the majority of patients. The last piece is just how our team operates. We, from the very beginning, prior to launch, we knew we were the small guys coming up against some really big competitors. We put a lot of emphasis on the skill sets of the team, the data that we collect, and the need to generate long-term real-world evidence, which is what's shown to the market, shown to physicians, to patients, very importantly to payers, how well ORLADEYO has behaved in the real world, and that's been a big part of our continued growth and success.
Let's pull on that further. What is it that the physician, what are the specifics of the physician observations, behaviors, they've gotten more experience prescribing ORLADEYO to their patients. What are those tangible things that they see that perhaps are different than what we knew six years ago?
I mean, physicians start with, it's nice to have data, but what's really important to them is their personal experience. What I always say about HAE treaters is the great majority of HAE treaters in the U.S. are allergists and immunologists, but the majority of allergists and immunologists don't treat HAE. It's a special group who've decided to do this. You end up with physicians who are expert in their area. They may have five HAE patients, they may have 20 HAE patients. A few of them have even more than that. But they develop experience within their patient population. As they've gotten used to prescribing ORLADEYO, they've seen what I described. They see that it works really well for most of their patients, not every one of their patients.
And then we've been able to feed back the real-world evidence on hundreds and now thousands of other patients to them that confirms their experience. Then they also see how we as a company work with their patients to make sure they have access, to make sure that that is never a problem for patients. All of that leads to confidence in the drug and the company and I think that's why we're still having our best demand ever this late post-launch.
That's helpful color. I mean, back to the demand side. HAE, I assume you would agree with the statement that if you have HAE you know it. Is that a fair spec? I mean, do you have to go find these patients?
Somewhat. HAE is a pretty mature market. It's still growing, though. You would think that the first HAE product launched in the U.S. back in, I think, late 2008. It's changed a lot since then. A lot of patients have come out of the woodwork because of the availability of therapy. You're still hearing stories about even classic Type 1 and 2 patients being diagnosed even as adults. Another two big areas of growth in the market. One is patients with normal C1 inhibitor, which in the United States was a large population searching for answers, and they didn't really have the evidence. A lot of doctors didn't believe in it. We've been able to provide the evidence in the real world, again, how well these patients are doing, and that's been a big part of growth. It's over a third of patients on ORLADEYO at this point.
Then I think the next frontier of growth is talking about kids with HAE. We recently got the indication for HAE for patients two up to 12 years old with a different formulation, a pellets formulation versus the capsule. Having an oral for these kids, you can imagine, is huge because injections and kids don't mix well. What we believe is it may lead to a transformation of how kids are treated. Classically, it was thought that maybe kids with HAE didn't become symptomatic until puberty.
I think what the experts are learning is more of these kids were symptomatic than they realized. An oral therapy may help unlock that. It's early days. We just launched with product at the beginning of August, but we're seeing demand that's ahead of our expectations, and we're excited about how that's going to help kids grow up differently, and also the halo effect beyond that because, of course, it's a genetic disease.
Got it. And maybe just to frame it a little bit more, you effectively have prophy versus on-demand, you have oral versus injectable. You've obviously pushed the market a lot to a significant share to the oral market. What are the dynamics on acute versus prophylactic today, and how are those evolving?
I've been in the HAE space for over a decade now, and in that time I've seen the use of prophylaxis more than double in the patient population. At this point, it's about 80% of diagnosed and treated patients are being treated with prophylaxis. Despite some advances in acute therapy, what we hear from doctors and patients is the goal, and it makes sense, the goal is to prevent attacks. Most patients have occasional breakthrough attacks, and so you always need a rescue medicine. Patients, despite recent introduction of an oral acute therapy, patients aren't moving backwards. They're welcoming that, but they really want to prevent attacks, and I think that that's going to continue in the future.
Okay. Just to round this out on the patient experience, we talked about the real world evidence, and I appreciate all this is tied together. We talked about it from the physician perspective. I know you gather a ton of evidence from patients directly in surveys. I think there's an annual survey that you do with the patients. What is the rank order number one, two, three, you would say, of preference from a patient of what they're most focused on?
It does come down to efficacy for patients at this point. I think if the market had evolved differently, if an oral drug were the first thing on the market, then maybe the vast majority would be on an oral. But already the majority of patients on prophy are on an injectable therapy, and they are doing well. What they always worry about is, as much as I might like an oral, I do not want to sacrifice anything. You have got to have efficacy.
Number two is safety is always in there, too, particularly at this point where patients have options and experience. Nobody is going to make a trade-off where they are worried about safety. Then modality becomes important after that. Independently, I think the majority of patients would prefer an oral, but not at the expense of other things. Then another piece is market access. Patients have experienced challenges with market access over time, so having their product paid for is something that they worry about and is something that they think about before they entertain the idea of switching therapies.
Okay. As a transition, some really good remarks just at the table. There was a big event last week, phase III, data from a competitor. I think you have been very clear and transparent on your perspective that you expected this data set to be effectively good and demonstrate that they have a real drug. Rather than debate the nuances of if it will get approved and how that is going to play out, what changes for you? What were you assuming? What were you modeling? Was this a bear case, base case? How do you frame that?
Yeah. First of all, congratulations to Pharvaris. I think they did a really nice job with that study. It was our base case. Jason, you alluded to the fact we do a big annual survey. Every year, and this goes back to before launch, we do a study, a big conjoint analysis followed by a market simulation model that involves 100 patients, 175 HAE treaters, all in the U.S., and over 50 payers. We give them the profiles of everything that is on the market today, plus what is coming. When we did this most recently over the summer, we have been giving deucrictibant the profile, basically, that they delivered in CHAPTER-3 . Actually, we gave them a little bit better efficacy in that.
What the simulation always shows is that, yes, once that drug launches, we expect that drug to start taking some of the new patient starts away from ORLADEYO. Not all of them because of the familiarity with ORLADEYO, so maybe it blunts our growth, but patients who are doing well on ORLADEYO are unlikely to switch. Then we back this up with qualitative research, too, with the patients who are on ORLADEYO today, and we show them the profile of everything to come, including this other one pill once a day with great efficacy, no side effects.
The answer we get back from patients on ORLADEYO is, well, but that just looks like what I'm already on. Because for them, that's what they're on. They're on one pill once a day, great efficacy, and no side effects. The ones who didn't get that have already moved on. That's what gives us really good confidence about the future is that a new oral therapy could slow our growth, but it's not likely to take away the base that we've built. Then we'll continue growing, particularly in the pediatric indication beyond that.
Would it be fair to say that, okay, I'm a patient, I have a preference for an oral. I tried ORLADEYO, it worked. I'm more likely to stay with that regimen because I'm comfortable with it. Similarly, I tried ORLADEYO, it didn't work. I went to a prophy injectable. That's a segment of patients that are likely to come back to try a new oral if they still have that preference. Then to your point, the incident market of new patients you'll be both competing for. Is that a reasonable way to put it?
From the oral perspective, yes. Then this is where we're excited to have navenibart for the other part of the market.
Yeah. No, I think that's a great transition. Let's talk about navenibart. Why is navenibart strategically important? Is the central insight that both an oral, that there's very much different preferences for an oral and injectable? I guess maybe as part of your answer, talk about will these two things cannibalize each other, or do you view them as complementary?
We really view it as fundamentally complementary, and that's why we were interested in acquiring Astria Therapeutics. There are about 5,000 patients in the U.S. market, and this is growing steadily, that are on injectable prophy therapies. As I mentioned, the market could have been different if an oral started, but patients were already on injectables. What's really important beyond what I mentioned earlier about efficacy is number one always will be number one. If a patient's thinking about switching, they have to have a reason to do that. I mentioned when we show a profile of one pill once a day to patients on ORLADEYO, they say, t hat's what I'm already on. When you show the profile of navenibart, which is every three or every six months, kallikrein inhibitor, really great efficacy in our phase II study.
Patients are getting down to a mean attack rate of less than two per year. By the way, the injections don't hurt because of the formulation. Patients look at that, and the majority of patients on injectable therapy are on TAKHZYRO, the longtime market leader. Patients say, Oh, that looks like what I'm on, TAKHZYRO, but better because of the dosing, because of the administration. For them, there's actually an impetus to switch. Doctors say the same thing. That idea of having two or four injection days per year and really great efficacy in a modality, in an MOA that they know so well in kallikrein inhibition, that's what really attracted us to navenibart, and we're thrilled how the program is rolling out at this point.
I want to come back to the Q3 versus Q6 in a second, maybe just we'll get there with the trial. You're running a pivotal trial now, I think it's called ALPHA-ORBIT, over-enrolled. You're looking at the two doses. Is that a one-to-one to one? How is that powered? I guess what makes the decision for you out of those data on will it be one? Will it be both? What can we expect out of the trial?
We fully expect, yes, the balance between the doses is identical within the limits of randomization in the trial. The goal is to have both doses in the label. I talked about the phase II data. What we are seeing in the ALPHA-SOLAR phase II data is equal experience in every three months and every six months. Mind you, the every six months is two injections, the every three months is one. You are getting the same amount of drug in a year, and what it is showing is the same reduction in attacks versus baseline, the same mean monthly.
We have high confidence that we are going to be able to get both of those doses into the label, and that is really significant because to have that option for patients, that becomes something that is really attractive to them. The study fully enrolled in June, and what it means is a year from June, the last patient will reach 12 months, and we will have a data readout in Q3 of next year on both the six and the 12- month endpoints in the study.
What about the physician angle? Does an allergist, are they going to, in some therapeutic areas, the physician might not want to not see their patient every six months for other reasons. Can you comment on that?
Yeah. It is actually neat with the way the dosing works. Physicians have long told us that because of the advances in prophy therapies in HAE, they will say, I used to see my patients four, six times a year because they were having attacks. Now I have to drag them in once a year to do the annual reauthorization. It has become more of a challenge to get patients to come in because they are doing well.
They actually like this idea of, I've had physicians, some of whom are investigators in the trial say, yeah, I'm going to try to bring my patient in every six months, not that they need help in dosing, but to make it more of like, go see your dentist every six months, go see your doctor every six months, even though you're doing well. Their physicians are very excited about this, and I think the fact that the study, as you said, over-enrolled and enrolled really quickly. It's the largest phase III pivotal study ever done in the space, and it enrolled as fast as any has ever done. It's because of the product profile.
Okay. Let's wrap up on HAE, one more question here. You built a great commercial infrastructure around ORLADEYO. Is that 100% portable over to navenibart, the operating leverage coming out of these two programs? I assume there's not a lot of additional spend and investment that you're going to have to make. Is that fair?
That's exactly right. Our team is super excited about having both. We have 40 reps out there. We'll have 40 reps to launch navenibart, same team. Because of that complementary aspect that we talked about earlier, and because of the skills of the team, we just have two great options for the market. To put it in perspective, we're spending a little bit less than $150 million on sales and marketing at this point. That's going to grow basically at cost of living increases. As the portfolio, by the turn of the decade, is $1 billion plus and growing, that's incredible leverage. As I said earlier, we can plow back into continuing to build a rare disease portfolio.
Okay. Switching gears to the pipeline. This program did come out from in-house, I believe, BCX17725. It's actually the next data card that you'll have for Netherton syndrome. Talk to us about that data set that's coming, I believe, before year-end, what we're going to get, what we should expect, and what does it mean, depending on how it breaks as far as moving to the next stage?
Yeah. Just for those not familiar with Netherton syndrome, it is a rare, predominantly skin condition, but not exclusively. It basically the uncontrolled tissue kallikrein, KLK5, because of a genetic defect, causes skin to turn over much more quickly. Patients, from a phenotype perspective, can look anything like really bad atopic dermatitis to something much worse. No therapies on the market, so it is tremendously underdiagnosed. There are some analogies to HAE before there were therapies. We think there are 3,000+ patients in the U.S. market versus based on claims data that we have done. At the end of this year, we have a KLK5 inhibitor dosed sub-Q every two weeks, and we are doing a three-month study, sub-Q after IV loading dose, three-month study in 12 patients. We will have that data at the end of this year, and that will inform what is next for this high-need condition.
Okay. Are you willing to set a bar? What are we looking for? What are the endpoints?
What we are looking for, we are not looking for perfection in this, because again, there is nothing for these patients. Physicians have only over-the-counter topicals just to try to do some palliative care. What we are looking for is consistency of effect. So of the 12 patients, what proportion of them show response that is clinically meaningful? So 30%-50% response based on scales of physician and patient measurement of effect. We are also looking, we are doing some dose ranging in the study, so we are looking for some evidence of dose response that can inform what is next. Is the next step going to pivotal? Is it going to more confirmatory studies? That is what we have to see, but we are excited about the program and we are excited about the long-term market opportunity.
Okay, great. We have got a couple minutes left. I want to turn back to where we started, which is more big picture BD strategy. We talked about profitable company now, balance sheet is getting stronger by the day. You have made some changes on the way you are going to approach innovation going forward. You are clearly going to be thinking about a meaningful BD effort, adding additional programs here and there. Without asking you to give us a particular disease or therapeutic area, walk us through the criteria. Rare disease, is that number one?
Number one is rare disease. It's got to be a rare disease where we think there's we see the opportunity for a meaningful improvement for patients. That could be better efficacy, it could be better dosing, like in the case of navenibart, different dosing, different MOA, but it's got to have a differentiating benefit that we see. We're going to be looking at the science to see if we believe in it. Nothing's going to be speculative, whether that is clinical evidence, whether it's really good preclinical data that gives us confidence in a target, biomarker data.
That's what Sandeep and his team will be looking for, because we don't want to take flyers on things where there's not a reason to believe in the therapy. Then it's rare disease with chronic therapy similar to what we see in HAE, so self-administered or home-administered therapy. We're not going to get into oncology. We're not going to get into hospital-delivered stuff. There's huge need there in rare disease, but that's not our sweet spot.
No AAV gene therapy or cell therapy?
Not going to do gene therapy, cell therapy. We can expand beyond orals and monoclonals, but we're not going to go too far afield from we'll stick to what we know.
Navenibart wasn't a small transaction for you at the time. I mean, it was a meaningful step.
Yeah.
I mean, any guidance around criteria, around structure, creativity about what you're willing to do there, size-
Yeah.
Any frameworks there?
Yeah. Just for context, when we bought Astria, that was a $700 million enterprise value earlier this year, and we did that because we could, but also because it was very strategic for us in the HAE space. The next things that we do are not likely to be that big. It's not going to be the same thing. It's more likely to be licensing type deals, earlier stage phase I/II, could be in the range of $100 million-$200 million.
We can afford that, but less likely to be full company acquisitions where basically we're not going to strain our balance sheet at this point. That's number one. And number two, now that we're profitable, this is a red line for us. We will never become unprofitable. Over the years, as we keep doing this, our operating leverage just keeps growing, and so deals could grow over time, but the next few that we do are more likely to be in the low hundreds upfront and then structured on the back.
Never profitably. Never not profitable. You heard it here.
Rare for a biotech company.
Yeah.
But we're going to do it.
Then it is a good place to end.
That is right.
Thank you.
Thanks, Jason. Appreciate the time.