BioCryst Pharmaceuticals, Inc. (BCRX) Earnings Call Transcript
March 12, 2024
Earnings Call Speaker Segments
Good morning, everyone. Welcome to Barclays 26th Global Healthcare Conference. My name is Gena Wang. I'm SMID Cap Biotech Analyst at the Barclays. It is our great pleasure to introduce our conference first presenting company, BioCryst Pharmaceuticals. With me today, we have Anthony Doyle, Chief Financial Officer; and also John Bluth, Chief Communication Officer. With that, maybe, John, do you want to make a brief overview of the company, and then we can dive into the questions.
Thank you very much. Thanks very much for having us here. [indiscernible] making some forward-looking statements, so those statements at risk, and you can find our risk factors on our website. And happy to have a chat with Gena. BioCryst is a company focused on developing medicines for patients with rare disease. We've got lead asset, ORLADEYO, which has been on the market for 3 years now. The launch is going very well. It's the first oral medicine for patients with hereditary angioedema. And then we have a pipeline of molecules that I'm sure we'll talk about also, which have the potential to be first-in-class or best-in-class for other rare diseases in the complement space and in other areas. And as we talk about our financial picture, we're in excellent shape. We've accelerated our path to profitability. We are on a path to have an operating profit this year and be profitable on an EPS basis by 2026. So lots of exciting things to talk about.
So maybe I think you ended with aiming for profitable later this year. So maybe why the focus on achieving profitability? And what is the goal behind it? And how do you reach that?
Sure, so the main focus for the company continues to be on growing ORLADEYO. So ended last year with $326 million in net sales guiding to $380 million to $400 million this year on a path to $1 billion. And so continuing the strong launch that we've had continuing to generate strong year-over-year growth in revenue is the main focus, continuing to invest in our R&D pipeline. So the change that we made with 10013 earlier in the year, means that the remainder of the R&D pipeline is relatively early and so requires a minimal amount of spend. And so the opportunity to get to accelerated profitability naturally, based on those numbers, is a great place to be to get to the point where, to John's point, this year, we expect operating profit, not including non-cash comp to be positive. Next year approaching on a quarterly basis, both EPS and cash flow positive and then in 2026 being there, all without needing to raise additional money. So being in a place where we are independent from the capital markets. Company has never been in the spot. Great place to be.
That's great. So regarding your guidance, $380 million to $400 million in 2024, maybe underlying assumption U.S. versus ex-U.S.?
Yes. The vast majority will continue to be in the U.S. So last year, Revenue OUS was around 11.5%. I would expect it to continue in and around that number and getting towards 20% as we get towards peak later in the decade.
Okay. Good. And then one metric -- important part is the for the new starts. We wanted to look for 66% from switch patients and then 34% is on-demand patients. And previously, we saw 50%-50%. So what makes you -- can you provide more color why you foresee this trend?
Yes. So we would expect to see continued growth in both areas, both as we have launched and other companies have launched prophylactic treatments in this space. The percentage usage of prophylactic treatment has grown from kind of 60%-40%, 70%-30% into probably 80%-20% at the moment. And so given where we're placed differentiated once a day. And I don't know if you saw Quad AI, we presented real-world evidence data that shows patients who switch from other prophylactic treatments are continuing to see really strong attack rates and in some cases, even better than when they were on other prophylactic treatments. So the growing market of patients who are on prophylactic drug gives us a great point for where we can continue that switch trending.
So regarding the real world experience, how long was the follow-up? And I do see the patient with the longer follow-up, the denominator becomes smaller So maybe a little bit more color there.
Yes. So the posters that we presented at Quad AI, several different real-world analyses, one, looking at patients of different attack rates, another looking at prior prophy, different prophylaxis medicines. Gena, those patients were on therapy for about 1.5 years when we took a look. And the reason that you see the number of patients getting smaller as you go through time is because not all the patients start at the same time. So we take a look at a patient who's been on for 6 months at the 6-month point. So you may have more patients there. If the patient hasn't been on for 1.5 years yet, they wouldn't be included in 1.5 years analysis. So they will be once they get there. They haven't necessarily discontinued the drug. They just haven't reached 1.5 years of follow-up yet because they started at a different times.
Okay. Okay. That's good. Actually, I just remember, I wanted to ask you the long-term goal you provided. Do you see -- one part is it's from competitive landscape and the other part is from IRA's perspective. So maybe -- I know you talked a lot about it from a competitive landscape perspective and what about from IRA perspective?
In terms of inflation reduction?
Yes.
So historically, this time last year, the [ HA Charities ] were in a spot where they were underfunded and what that was leading to was patients who were on Medicare not being able to afford their co-pays. And so we had what was a kind of full year basis impact of around $15 million to $20 million of patients who moved over to free product. And once you move over to free product, you have to remain there for the fiscal period. With the Inflation Reduction Act kicking in this year, what we see is the co-pay maximum goes to about -- a little over $3,200 for those patients, which is still very high for people who are on fixed income. Next year, it goes down to about $2,000. And at that point in time, patients have the ability to spread it over a 12-month basis. What we expect to see is continuing strong growth in that area and then focusing on switching those patients over to a reimbursed product, probably more so next year and beyond from there, but ultimately getting to the point where on an overall basis, both commercial and Medicare patients, we can get the paid rate up to around 85%.
So given the drug is oral formula, any concern in terms of long term, the price pressure there?
No. Not that we don't have concern, not that we're not kind of focused and keeping [ our rigs to the ground ] and making sure that we're cognizant of any changes. But at the moment, we see a long IP life for the product out until 2039 and are confident that we will achieve and then maintain that $1 billion.
Okay. Now going back to the launch metrics. The other one important part is, let's say, free drug percentage. Right now, you might mention also close to 30 -- 28.5%.
Yes.
Yes. And then what is your long-term goal? And how do you see that change? And how would you make that change?
Yes. So it's when -- if I bifurcate it into commercial versus Medicare, the commercial paid rate is very strong, right? The team are focused on getting it up from in the 70s to -- in the 80s and we'll continue to work on improving it. Medicare is different, right? Medicare were -- I think based on the challenges that we saw last year, based on the changes that we're going to see in the IRA, that's where we feel most confident that we can make significant change in getting that free drug rate down into the kind of teens, high teens is our focus over the next 2, 3 years, but it will take some time for us to do. I'd say the most significant change that we'll see will be from next year onwards once the impact of Medicare and the IRA starts to kick in.
So what percentage do you expect the number will be when exiting 2024?
I hope there will be some incremental changes from that rate that you talked around 30% might be marginally better from that. But again, going into next year and then the next 2 to 3 years being able to take that down into the low 20s and then high teens from there?
Okay. That's very helpful. And then regarding another important metrics that you wanted to maintain retention rate at the current rate, that's at 60%, right. And so maybe walk us through when we look at the prescriber numbers like 2,500 and then the patient numbers, 1,100, if I calculate correct. So like how did that derive to the 60%?
Yes. So the 7,500 patients out there in the market, of which -- we've seen about 2,500 prescriptions. Now bearing in mind some of those prescriptions are re-prescriptions for individuals who maybe were on ORLADEYO early. And then whether it -- for whatever reason, whether it's perceived lack of efficacy, GI, et cetera, ultimately didn't give ORLADEYO enough of a chance. And so wanted to come back to the drug. So the 2,500, you got to take that down on the basis that you've got people trying out more than once. And then for the 1,100, that doesn't include Quick Start patients. And Charlie had shared data around the number of net new patient labs that we had last year at north of 300. So you can imagine, Q4 was strong. The number of patients that we had on Quick Start at the end of the year was high and continuing to grow. So you got to change the numerator, change the denominator. But ultimately, we have access to -- by using our sole-source specialty pharmacy, really strong data. And so that 60% has been very consistent, especially over the last couple of years, and we're seeing no reason to believe that it won't be consistent at least over the short term.
If I recall correctly, early years, I think it was higher, right? It was over 70% and then gradually go down. And now last year, you stabilized at 60%?
Yes. So I mean, early in the launch, you're still continuing to gather data. And so if you think about right at the start of the launch, we had some patients who came over from clinical trials. So they'd already been on ORLADEYO for a long time anyway. And so when we're tracking what our discontinuation rate, we're currently looking at a 12-month period. So it's fair to think that those patients, the discontinuation rate for patients who had already been on it for a long time was going to be lower. But then as we got more and more patients on to the point where you said, we're over 1,100 patients at this point, getting to a place where we have a 60% retention rate is a really good spot and based on what we see from real world evidence, based on what we see from patient data in terms of our actual patients on drug and based on what we're seeing from our market research, we think that's a good benchmark for us to use.
And then you are not concerned about, say, better oral drug or lower frequency of, say, subcu drug?
No. I think that in this space, what we're seeing in the real-world data with ORLADEYO is that we have a 60% retention rate. So for 40% of patients, the drug doesn't work well for them and they move on to something else. For the 60% of patients for whom ORLADEYO works, it's working really, really well. And what you see in the real-world data is that means they are having no attacks or very infrequent attacks, the same level of attack control that they're getting with the injectable prophylaxis medicines in many cases. So by the time new entrants come and potentially another oral in 3 or 4 years, patients who are well controlled on ORLADEYO are going to be well controlled, not having attacks or not having many attacks on a once-a-day oral medicine. So for an HAE patient, there's a lot of loyalty to the medicine that's controlling their attacks because they remember what life was like before their attacks were controlled. And it was a scary time. So that's why you still see patients today on Cinryze and older medicines, and it's been hard for us to switch patients from Takhzyro, but we've switched a lot of very well-controlled Takhzyro patients because we have an oral medicine that also controls their disease. So HAE patients on ORLADEYO don't have to choose between convenience or efficacy, they get both. And so we've been able to do that with a disruptive technology in oral medicine that's also effective. Nothing that's coming that we see, and we've done -- we pulse market research on a regular basis across 175 doctors and 100 patients or so every quarter. And what we see coming back to us is that there's nothing a well-controlled ORLADEYO patient. There's nothing in the competitive landscape that would encourage a well-controlled ORLADEYO patient to switch. They're already well controlled on 1 pill once a day, and it's something we'll continue to watch very closely.
Okay. And then one last metrics regarding the importance of the long-term guidance and then that's, say, the compliance rate. So where do you see it sits now, I think, over 90% right? So where do you see will stabilize over time?
Yes, we've seen it stabilize. And since we've launched that over 90%, there's fluctuation, plus or minus 1% at any given point in time, whether it's holiday, seasonal, et cetera. but strongly over 90%, and we expect that to continue.
Good. And then Europe, you did put down maybe roughly $200 million, that's from ex-U.S...
OUS, yes.
OUS. So maybe like where do you maybe lay out the ex-U.S. regarding the pricing where do you see? And then why the revenue is much less in the OUS?
OUS for us is a great opportunity. And so starting with Europe, we've already launched in a bunch of countries like the U.K., France, Germany, the Nordics. We continue to launch in Italy, Spain. There's other countries, Benelux, Ireland, et cetera, that will continue to grow in. The dynamic there is different, right? The centers are very concentrated. And I think we've already seen penetration in all of those major centers in all countries that we've -- we've gotten to. And so it's fair to think that all of the $200 million OUS, a majority of that will come from Europe. To your point, the major difference there is pricing. And so it does take about 4 or 5 OUS patients to get to 1 patient here in the U.S. based predominantly on pricing. But still, very good opportunity, a bit more of a volume play, but we're excited about how it's gone thus far being at 11.5% of revenue last year, growing to where we think it will get to closer to 20%. Other markets are important. Japan will be an important market for us in the future. But then also partnering as we look at areas like Latin America, Central Eastern Europe, Middle East, et cetera, all of these countries on an aggregate basis are important to us. It's important to get those patients access to our drug. On an aggregate basis, will contribute meaningfully to that $1 billion.
How much pediatric contribution to this? And how is the enrollment regarding the study design?
Yes. The enrollment is nearly complete. It's gone very, very well, very, very quickly. We expect that there are about 500 pediatric patients. That's great. We think that most parents will want their children to start on an oral medicine versus injecting them. The added value of the pediatric indication, though, is sort of the halo effect in the family. HAE is a hereditary disease. And so as parents start to see their children doing well on ORLADEYO, could further enhance the penetration of ORLADEYO in the adult population. When we were at the Patient Summit this summer, parents are so excited to have an oral option for their kids. So we're excited to file an sNDA next year and get closer to bringing that to them.
Good. So we have a few more minutes to discuss about the pipeline assets. The first one is the next-gen oral Factor D maybe update there and then the latest thoughts regarding the future of the asset.
Sure. So 10013 is currently in a clinical trial in PNH patients, and we're trying to determine if we have a safe and effective best-in-class dose. And if we do, we should have a readout middle of the year. So we're on track for a midyear readout. If we do have that profile, we announced in January that we'll plan to partner the program at that point. And if we don't, we'll discontinue the program. So it's a pretty binary outcome based on what the data tells us, and we're on track to have that middle of the year.
So what is the bar for you like in terms of the clinical profile to decide moving forward or discontinue?
Yes. We're really looking at -- so the bar that's been set by iptacopan. And so for alternative pathway activity in PNH patients that's looking at getting LDH to less than 1.5x the upper limit of normal and seeing the kinds of improvements in transfusions and some of those metrics that you see with iptacopan, that's where the bar is.
Have you already engaged some partnership discussion? Or you will wait until the clinical profile final?
Yes. When we announced this earlier in the year, we -- our [ downside ] was pretty full. So there's been a lot of interest, a lot of discussions with potential partners. But obviously, they want to see data. We want to see data. So as soon as we have that data, we can make those conversations more of us then go from there.
Good. Now the other early-stage programs, maybe wanted to highlight, you did host R&D Day, went through a lot of different candidates, maybe your current thinking. And then you did mention you wanted to be focused on how to spend the cash, right? So maybe how do you prioritize the early-stage pipeline? What are the key focus from here?
Yes. As Anthony mentioned, the pipeline programs that we shared at our R&D Day, they're all early stage. So they're relatively inexpensive. So we can sort of prioritize pace with all of them right now. And our goal is to get them to a proof-of-concept point as quickly as possible so we can know what we've got with them. And so the first up from the pipeline is BCX17725, which is a protein therapeutic for Netherton syndrome, a horrible skin condition that kids are born with, and there's really no therapy for. That program will enter the clinic later this year. So that's next in line. And then behind that is our Avoralstat program, that's a Kallikrein inhibitor that we originally studied for HAE, and it didn't work in the HAE program because it wasn't very soluble but that's perfect for eye conditions. And we have a partnership with Clearside that allows us to inject Avoralstat directly into the suprachoroidal space in the eye for patients with DME. And so that will go into the clinic next. And then the other programs that we referenced on our R&D Day, we're an Oral C5 program. That's very exciting. That would be a disruptive technology also. Looking at myasthenia gravis for that program, we've got a number of really attractive molecules and we'll pick a lead program there and move that into the clinic. We also have a bifunctional protein, looking at treating complement-mediated diseases with a couple of different approaches to the complement pathway in a single bifunctional protein, and we have an Oral C2 program that we are advancing. So that's the kind of the speed tour through the pipeline, and we're moving as fast as we can with all those programs.
And the investment focus in there is first-in-class, best-in-class, differentiated molecules. And then to John's point, given the breadth of the spreading risk. And so whether it's multiple different disease indications, whether it's small molecule, large molecule, ultimately, getting to the point where somewhere in there in our pipeline, getting a next drug behind ORLADEYO to the market is we believe based on the strength of that pipeline that there's something in there that's going to hit.
Very helpful. So maybe out of -- I think the 2024, your R&D cost will be below $200 million, right?
Correct.
And out of these, like what proportion of rough range that will be applied to the early stage R&D cost?
Yes. The biggest two focuses will continue to be 10013 as we get to proof-of-concept. And then ORLADEYO in real-world evidence and then the pediatric side of the health. The earlier phase will continue to grow, and our approach will be as and when we get to first-in-human. At the moment, they're in kind of an exploratory bucket. We'll lift them above that and then start to talk about individual expenses, probably 50%-50%, a little less on exploratory than 50%-50%. But our goal is getting to the point to John's point where next year, we can move them above that line, get them into human trials. And at that point, we'll start to highlight what they are on a very specific basis.
Okay. Very good. I think we are right on time, and thank you very much, Anthony, and John for giving us this opportunity.
Thank you.
Thanks, Wang.
Okay. Thank you, everyone.
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