Good day, and welcome to the BioCryst Fourth Quarter 2023 Earnings Conference Call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to John Bluth at BioCryst. Please go ahead.

Thank you very much. Good morning and welcome to BioCryst fourth quarter and year-end, 2023 corporate update and financial results conference call. Today's press release and accompanying slides are available on our website. Participating with me today are CEO Jon Stonehouse; CFO Anthony Doyle; Chief Commercial Officer, Charlie Gayer; and Chief Medical Officer Dr. Ryan Arnold. Following our remarks, we'll answer your questions. Before we begin, please note that today's conference call will contain forward-looking statements, including those statements regarding future results unaudited and forward-looking financial information, as well as the company's future performance and/or achievements. These statements are subject to known and unknown risks and uncertainties which may cause our actual results, performance or achievements to be materially different from any future results or performance expressed or implied in this presentation. You should not place undue reliance on these forward-looking statements. For additional information, including a detailed discussion of our risk factors, please refer to the company's documents filed with the Securities and Exchange Commission, which can be accessed on our website. In addition, today's conference call includes non-GAAP pro forma financial measures. For a reconciliation of these non-GAAP measures against the most directly comparable GAAP financial measure, please refer to the earnings press release posted in the press releases section of our Investor Relations website at biochrist.com. Now, I'd like to turn the call over to Jon Stonehouse.

Thanks, John. 2023 was another impressive year for ORLADEYO, starting with generating $326 million in revenue in just the third year of launch. We continue to make great progress toward our goal of a global peak revenue of $1 billion. Let me explain why. Late last year, we laid out a set of assumptions that would lead us to $800 million in peak sales in the U.S. The first assumption was to exit last year with a base of approximately 1,050 patients on therapy. We actually exited the year with a base of over 1,100 patients on therapy. Second, we added over 300 net new patients, well above the average of 200 per year we need. Third, we improved the percentage of paid therapy in the commercially insured part of the business from 7% to 79%. And fourth, we made a modest net annual price increase in the U.S. In all four of these assumptions, Charlie executed so that we met or exceeded each of these goals. That's great execution and real progress towards our goal. Today, we'll focus our prepared remarks on ORLADEYO and the financials. We'll start with Ryan, who will cover the data presented at Quad AI this past weekend, and how many patients on ORLADEYO are seeing excellent control of their HAE, along with the convenience of once daily dosing. With that, I'll pass it over to Ryan.

Thanks, Jon. I've had the privilege during my career to work on several therapies that helped change the lives of patients who live with chronic, life-altering diseases. An important lesson I've learned is that long-term data and particularly, evidence from real world experience, especially in rare disease are critical to understanding how a treatment can address unmet needs and change the lives of differing patient populations. This is an exciting time for ORLADEYO because after three full years on the market, we are seeing a very consistent picture emerge from the building evidence. Real-world experience and the long-term clinical data are telling a very consistent story of how ORLADEYO can provide meaningful benefits to a variety of HAE patients. We recently published the final analysis of data from the open label long-term extension portion of the APeX-2 study of berotralstat. The patients who started on blinded berotralstat 150 milligrams and completed the full two years of the study had an average reduction of 90.8% in HAE attacks, compared to their baseline rates. But most don't measure their attacks in percentages. What's most meaningful to people living with HAE is that they get the chance to live a normal life by minimizing their attack burden and experience meaningful improvements in their everyday quality of life, all while avoiding the unnecessary potential burdens of treatment. ORLADEYO treated patients in this long-term study reported rapid and sustained improvements from a baseline of 3.3 attacks per month to 0.3 attacks per month after two years, with a median attack rate of zero at month 24. These patients also reported meaningful long-term improvements in quality of life, treatment satisfaction, and an overall safety profile that is very reassuring for people living with this lifelong disease. That kind of change and the sustained low rate of attacks with just one pill once a day is transformative for many patients. These long-term data from our clinical program tell an important part of the story, which is being consistently reinforced by our expanding base of real-world evidence. This past weekend at the Quad AI meeting in Washington DC, we presented five posters showing strong real world evidence with ORLADEYO in a variety of patients with HAE. What patients are experiencing in the real world is consistent with the two year clinical data. Patients with Type I or II HAE are reporting long-term median attack rates of around half an attack per month after switching from other prophylactic therapies. By their own account, these patients are having fewer attacks on ORLADEYO than on their prior therapies. Patients report rapid and sustained reduction in attacks or maintaining attack-free status regardless of whether their baseline monthly attack rate was very high or very low prior to starting on ORLADEYO. These data on effect, regardless of baseline attack rate, are consistent with the evidence we have presented from our clinical trials. Patients diagnosed by their physicians as having HAE with normal C1-inhibitor levels also are reporting rapid and sustained reductions in attacks on ORLADEYO. And we are seeing similar progress outside of the United States, particularly in countries like France, where patients can be followed in comprehensive programs with the active involvement of healthcare providers. This real world evidence demonstrating the long-term safety and effectiveness of ORLADEYO is exciting. Our team has been hearing the stories of ORLADEYO over the past three years, and these data further illustrate why it is such a favorable treatment option for people living with HAE. What is even more exciting is that the data we presented at Quad AI are just the start. We will continue to generate more real world evidence with ORLADEYO over the coming years, and we look forward to showing again and again how this treatment can help change the lives of patients and families impacted by HAE. I'll now turn it over to Charlie to describe how this emerging evidence is translating to our commercial efforts.

Thanks, Ryan. As Jon noted earlier, we recently described how consistent net patient growth of 200 per year for the next several years puts us on track for $800 million in sales in the United States. Entering our fourth year on the market, we are very much on track, because we added 321 ORLADEYO patients in the U.S. in 2023. The real world evidence that Ryan described helps explain this growth. Patients would like convenience, there's no doubt about that. But what they demand is efficacy, control of their attacks. The real world data with ORLADEYO clearly demonstrates that patients can have both efficacy and convenience. No trade-offs. Our teams have done a very good job of launching ORLADEYO, but in the end, patient experience will dictate how far we go. Ryan shared that after switching to ORLADEYO from other prophylaxis therapies, patients experienced a median rate of about half an attack per month. What that means for patients is that many or most months are attack-free, and attacks that need to be treated are often less severe. Half an attack per month is also an important benchmark. We do market research with large samples of HAE patients, and we've reported previously at a medical congress that half an attack per month matches the level of attack control reported by patients taking injectable prophylaxis therapies in the real world. This low and consistent rate of attacks on ORLADEYO meets patients' expectations, because they know from experience that perfect control is unlikely with any product. For many patients to be able to get that level of control with an oral once-daily therapy is transforming how they live with HAE. We recently conducted an anonymous market research project with a sizable cohort of patients who have experience with ORLADEYO and asked them, as part of an exercise to write a letter to ORLADEYO describing that experience. Themes such as, you gave me confidence; you changed my life; and I feel like a normal person again were common. The strong evidence from patients also continues to shape prescriber expectations and give them confidence. Our large quarterly surveys of allergists in 2023 showed they consistently expected to grow the proportion of their HAE patients treated with ORLADEYO by about 30% over the next 12 months. As we noted in our press release today, the number of patients on paid therapy or our long-term free product program also grew by 30% in 2023, tracking with physician predictions. Currently, about 50% of patients on ORLADEYO have switched from other prophylaxis, but the allergists in our 2023 surveys expect about two-thirds of ORLADEYO growth over the next year to come from switches from injectable prophylaxis. By the end of 2023, ORLADEYO had been prescribed over 2,500 times in the United States. That means that at least 5,000 diagnosed and treated patients have not yet tried ORLADEYO. Over 1,000 US healthcare providers have now prescribed ORLADEYO, including over 200 new prescribers in 2023. But clearly, there is an opportunity for HAE treaters to recommend ORLADEYO to many more of their patients, just as our market research predicts. We have way more opportunity in front of us than behind us, and the growing body of evidence about how ORLADEYO is changing patients’ lives is going to help us get there. I'll pass it to Anthony to describe our financial performance.

Thanks, Charlie. It was great to see such a strong Q4 and full-year 2023 for ORLADEYO. Not just the revenue performance, but the continued underlying strength in net new patient adds, giving us confidence of achieving between $380 million and $400 million in global ORLADEYO revenue this year on our path to peak sales of $1 billion. You can find our detailed fourth quarter financials in today's earnings press release and I call your attention to a few items. Total revenue for the quarter came in at $93.4 million, $90.9 million of which came from ORLADEYO. And ORLADEYO's net sales for full-year 2023 at $326 million, an increase of $74 million or 30% year-over-year. Of the $90.9 million of global ORLADEYO revenue, $79.4 million came from U.S. sales with the remaining $11.5 million or 12.7% coming from ex-U.S. On a full-year basis, U.S. ORLADEYO sales contributed $288.4 million of the $326 million global total, with the remaining $37.6 million or 11.5% coming from ex-U.S. Operating expenses, not including non-cash stock comp for the quarter were approximately $119.6 million. Included in this are some significant one-time expenses. These include about $5.4 million attributable to the R&D reorganization, including costs related to the reduction in force and the postponement of the expansion of the Discovery Center in Birmingham, Alabama. The $5 million upfront payment we made to Clearside related to our partnership, as well as around $7 million in CMC and other trial costs related to our partnership decision for BCX10013. All of which explain the increase in OpEx from Q3 of 2023. Operating expenses not including non-cash stock comp for the full-year came in at $379.5 million, which when excluding the $5.4 million of restructuring one-time adjustments I mentioned landed it within our guidance range. We expect that quarterly expenses in 2024 will normalize in the low to mid-$90 million range taking us in line with our full-year 2024 guidance of between $365 million and $375 million and essentially flat to 2023. Cash at the end of the year was at $390.8 million and net cash utilization for the quarter was $8.4 million. In January, we provided guidance on our near-term timeline to achieve profitability. For 2024, we expect that revenue will exceed OpEx, not including non-cash stock comp and this will result in us generating an operating profit this year. Additionally, with revenue exceeding $350 million, it puts us into a tier whereby the incremental revenue will be more profitable as the blended royalty rate is reduced. In the second-half of 2025, we expect to be approaching net income and cash flow positivity on a quarterly basis and then in 2026 we expect to achieve net income and cash flow positivity on a full-year basis. Achieving independence from the capital markets while we also continue to invest in further expanding our global reach for ORLADEYO and expanding our label with the pediatric indication, while also further advancing our exciting early stage pipeline puts the company in a very strong position moving forward. Operator, we'll now open it up for Q&A.

We will now begin the question-and-answer session. The first question comes from Tazeen Ahmad with Bank of America. Please go ahead.

Hi, guys. Good morning. Thanks for taking my questions. Can you give us a little bit of color regarding the patients that you are able to add last year? They came, as you said, higher than what you anticipated? Was there a particular profile of patients that was added that you weren't expecting? And in general, do you have a sense of what level of baseline attacks patients have when they are switching, in particular to your drug from another drug? And then I have a follow-up. Thanks.

Sure. Tazeen, there wasn't really a profile that we weren't expecting. Since the beginning of launch, we've been getting patients from all different profiles, as Ryan laid out with some of the data presented this weekend at Quad AI. Regardless of baseline attack rate, regardless of background therapy, patients do really well on ORLADEYO.

Do you want to take the rest of that, Ryan?

Yes, is there any phenotype? I think what she's asking is, is there a baseline attack rate? Is there any particular group that's going into switching to ORLADEYO?

Yes. And I'll call your attention to slide six and slide eight in our deck. Both of these speak to the background or baseline attack rates. And what you'll see here is despite varying attack rates, be it high or low, patients do very well on ORLADEYO. Slide eight specifically calls out a baseline attack rate of 1.33 at baseline for those with HAE Type I or Type II. And again, those patients did very well, achieving an attack rate of 0.5 at day 540. So they had a rapid and sustained reduction in their attack rates. So basically, a variety of patients can benefit from ORLADEYO regardless of what their baseline attack rate is.

Yes. So Tazeen, you really can't predict it. So the goal is to get everybody to try it and see if it works for them.

Again, I just want to ask whether in real life, you were seeing something different relative to what you had seen in clinical trials? It seems like the answer to that is no. And then maybe just as a follow-up, how are you thinking about discontinuation rates on a go-forward basis? How have they been trending? Any changes from the time that you launched? Thanks.

So Charlie is alive.

The discontinuation has been really steady in 2023 in the last few years. So still, when a patient starts ORLADEYO, we get 60% of those patients to 12 months, and then very few discontinuations after that. And I think relating to your earlier questions too, we see the same retention rate regardless of patients' background. So regardless of their attack rate, regardless of whether they're switching from prophylaxis or coming in from acute only, they're all staying on at about that same rate, 60% a year.

Okay. Thank you.

The next question comes from Brian Abrahams with RBC Capital Markets. Please go ahead.

Good morning, everyone. Thank you for taking my question. Congratulations on the ongoing progress. I'm interested in hearing about your sales and marketing strategy this year compared to last year. Do you anticipate continued benefits from the team territory changes made in 2023? What will be the focus of your additional SG&A investments in 2024? Also, are there any modifications to your commercial strategy considering that a larger share of the opportunity is expected to come from switchers rather than just patients on on-demand treatment?

Charlie, do you want to take that?

Yes, Brian. One of the reasons we performed well last year is that we made adjustments to the team at the start of 2023. By the end of last year, our additional sales staff, patient services, and market access teams were all engaged and comfortable in their roles, collaborating effectively. This contributed significantly to our success. Regarding your question about changes in the data that Ryan presented, we believe it's essential, and we are dedicated to ensuring that patients and physicians feel confident about transitioning from injectable prophylaxis to ORLADEYO, as this presents a valuable opportunity for patients. We are starting to see our customers grasp this, so we will concentrate on that messaging.

And Brian, what I'd add...

Got it. Thank you.

One thing I'd add, Brian, is that Charlie mentioned was this increasing confidence in the doctors. You compare that to a year ago, where people were still kind of on the fence. And it's really because they've had experience and are seeing it work extremely well in patients. So that will have an effect on that, that'll be really positive for ORLADEYO and for patients.

Got it. Thanks, Jon. And maybe just a quick follow-up. It sounds like you've got some visibility to getting to the goal of a paid rate of 85% by the end of the decade. Where do you think you can get the paid rate this year relative to 2023? What's embedded in your guidance? And how much potential upside could there be versus your guidance if things go better than expected on that front? Then I'll hop back in the queue. Thanks.

Brian, what we've said before is that, that 85% number, yes, we're very confident we'll get there, but it's going to take us a few years. And so we announced this morning in the press release that we ended last year at a rate of 71.5%. So we'll make some incremental improvements to that, but don't expect any major changes. We're not going to jump straight to 85%. We'll get there probably more in the 2026-2027 time frame.

Got it. Thanks, Charlie. Thanks again.

The next question comes from Jessica Fye with JP Morgan. Please go ahead.

Hey, guys. Good morning. Thanks for taking my question. Can you just talk about the extent to which your near and long-term top line expectations for ORLADEYO reflect the introduction of less frequently dosed injectables and other orals? Thank you.

Hi, Jess. We consider all new product introductions, including new injectables and potentially new oral medications in the future. As Jinky Rosselli and I mentioned in the last earnings call, once patients start a therapy and it works well for them, they tend to stick with it. When patients are experiencing good results with ORLADEYO, we observe that they are not switching to other therapies. Additionally, ORLADEYO stands out as a unique once-daily oral product, which is highly sought after by patients and healthcare providers. While a new injectable therapy may provide some additional benefits, it does not offer the same level of differentiation as ORLADEYO does.

Consider the question from the opposite perspective: why would patients switch to another product? What additional benefit would they gain? As Charlie and Ryan highlighted, patients are not compromising on efficacy for convenience. This medication works exceptionally well for specific patients and is taken once a day. Therefore, what extra benefit could make them switch? While we do see some switches occurring, there must be a significant advantage for that to happen. It’s important to note that if patients are managing well on our drug, there isn't a possibility for them to achieve better results elsewhere.

Thank you.

You're welcome.

The next question comes from Liisa Bayko with Evercore ISI. Please go ahead.

Hi. Just to follow up on that, you have a 0.5 in attack rate per month, which translates to one every two months, or six per year, after switching from other prophylaxis. Would those types of patients not be interested in possibly trying something else? That's just one question I have, but I actually have more questions beyond that.

Ryan, do you want to tackle that one? I mean, the bottom line is nobody does better than that. That's kind of the standard. Every drug has breakthrough attacks. And in that number is a mixture of people that aren't having attacks and some that are. But Ryan, I don't know if there's anything else to add.

Yes. As Jon mentioned, we are observing similar attack control with other injectable therapies. We consider this not a trade-off, but a trade-up because patients desire not just attack control but also added convenience and improvements in quality of life. We have reported this in our clinical studies as well as in real-world evidence. A frequency of 0.5 attacks per month is performing very well, and this figure does not account for attack severity, which many have indicated is quite manageable. This represents a significant improvement and appears comparable to injectables regarding attack rate control.

Yes. So Liisa, don't get confused by the numbers of attack rate reduction in a pivotal study because the confidence intervals from those studies overlap. They all work, is the bottom line, and they're not perfect. They all have some breakthrough attacks.

Okay. And have you done any convenience analysis like market research on these sort of like very long-acting agents? Because it seems like at some point, you might tip the balance between taking an oral pill and frequent injection. I realize that some people don't like injection too. But is there any, I guess, like elasticity there in a way?

Yes, that's a really good question because we're very cautious. I asked Jinky about what the frequency of injectable dosing would need to be to compete with a once-daily oral option. We’ve conducted that research, but we haven’t found an answer yet.

Sorry to interrupt. I would just add, I think people underestimate the fear of injections that patients experience. While it can be convenient for some, I think that fear and fatigue of injections can be underestimated. And we hear that continuously from our physicians and from patients as well. So they are seeking convenience as well as that aspect of living a normal life and carrying around a once-a-day oral feels very normal for a lot of patients.

Okay. Great. And then just a quick question for me. Can you kind of go through the math of like how many patients you've treated so far? How many patients like HAE patients are out there? And how many more need to try ORLADEYO given the kind of like stickiness of the product? Like maybe whatever half the patients or so end up like sticking to it long term? Can you kind of like go through from here to get to that sort of $800 million number?

So start with the 7,500 and work backwards.

Yes. Lisa, near the end of my remarks today, I noted that there are at least 5,000 patients who have not yet tried ORLADEYO. This is based on our earlier estimates indicating that there are around 7,500 diagnosed and treated patients. To date, we have had 2,500 prescriptions issued. Therefore, there are at least another 5,000 patients. Based on feedback from physicians and patients, we anticipate many more trials among those 5,000. So, there is significant potential for growth.

Okay. What do you think is needed to reach that $800 million number? Do you believe that half of those patients need to try it? What is the expected amount?

That's probably a pretty good estimate. What we need to get is to about 2,000 patients who are sticky at peak, and we are more than halfway there at this point.

You're welcome.

The next question comes from Stacy Ku with TD Cowen. Please go ahead.

Thanks for taking my questions. So first question is around kind of potential implications with the change in the Medicare Part D redesign due to IRI. So could there be any potential impact to patient volumes with the decrease in the max out-of-pocket spend? And what would be the timing of something like this? So that's one. And then just a follow-up to some of the questions that have been asked. Can you just further characterize your commentary around the clinicians that are prescribing in more academic, more community? Is it really still just that 50% split now? Thanks so much.

Thanks, Stacy. So on the IRA, particularly next year when the max out-of-pocket shifts to $2,000, we think that will be an advantage for patients in terms of affordability. Very importantly, is that next year, that $2,000 can be paid over the course of the year in the 12 month increments. We think that will increase affordability and likely increase the rate for ORLADEYO. I don't think it will really change the volume of patients treated; it's just going to affect the rate. And then as far as clinicians, we see a great mix. Again, we see the academic physicians as well as a lot of community physicians. As I said, over 1,000 healthcare providers have prescribed so far. And that is really distributed evenly across the deciles of our healthcare provider potential index. It's been very consistent that way every quarter. So we're getting both academic and community.

Understood. And just a follow-up. Does that mean that you think as the rate improves for kind of the IRA changes, you do think that you'll be able to kind of switch more patients over to paid drug? Is that a fair way to think about it?

Yes. Yes, we do. Next year in 2025 and beyond.

Thanks.

The next question comes from Serge Belanger with Needham & Co. Please go ahead.

Hi, good morning. Thanks for taking my questions. I guess the first one for Charlie. Can you just give a little color on the 1Q seasonality this year? Is it similar to prior years? And then second question, I guess, for Jon and maybe the rest of the team. I think you've all been consistent that you do expect competition from an oral prophylactic by the end of the decade. Just curious your thoughts on an oral, on-demand treatment and what impact that could have for the market? Thanks.

Sure. Hey, Serge, I'll start with that. For 1Q, yes, we expect similar seasonality with the first quarter revenue being down versus Q4. We had a really strong Q4. So we actually think the percentage reduction could be a little bit more this year. So I think 7% or 8% drop from Q4 and probably mid-80s in revenue for Q1.

And with regard to oral competition, specifically on-demand therapy, I mean we certainly can't argue that orals are important. Having an oral alternative for a breakthrough attack is a significant benefit for patients. An all-oral option would be fantastic; prophylaxis and when you have a breakthrough attack, take an oral on demand.

Great. Thanks.

You're welcome.

The next question comes from Gena Wang with Barclays. Please go ahead.

Thank you for addressing my questions. I have one about the data report. If we examine slides six, seven, and eight, we see that over two-thirds of patients—specifically at the beginning and the end of the patient count—approximately one-third remained until the conclusion of the data report. Could you provide insights regarding the remaining two-thirds of the patients?

Yes. Maybe I'll let you start, Ryan.

Thank you for the question. These patients are self-reporting their attack rates, and since this data comes from real-world experiences, there are limitations in how this information is recorded. There may be months when patients do not report their attack rates, but that doesn't necessarily indicate they have stopped therapy. All the patients shown in these slides have completed 540 days of therapy, and we are still waiting for some others to complete that same duration to include them in the analysis.

To keep somebody in a study for two years is challenging certainly. And remember, some patients don't do well in our drug. We've got about a 60% retention. It's not uncommon to see people not succeed, and you see that in some of these results.

Just to underline what Ryan said, I just want to make sure it's really clear. In this real-world evidence, we measure patients based on the length of time that they have therapy, and some of them just haven't had the opportunity to reach 540 days because they started at a later time point. So it's a dynamic sample. Of course, some patients do drop out, but this represents how well patients when they're doing well on ORLADEYO, they're really sticking with it.

The point, Gena, is that the patients that do well, do really well on our drug.

Okay, great. Thank you.

The next question comes from Francois Brisebois with Oppenheimer. Please go ahead.

Hi, thanks for taking the question. I was just wondering, in terms of the discontinuation rate, what leads to this discontinuation rate? Is it that for those patients that just aren't doing well? Or is there any other reason out there? And if they do discontinue, what do they usually end up doing?

Thanks, Francois. The discontinuation rate, there are two main reasons for discontinuation, and these won't be surprising. The number one reason is perceived lack of efficacy. No drug is perfect, and no one HAE therapy is for everybody. That's the number one reason reported. The number two reason is adverse events, specifically gastrointestinal, which is not surprising given the product label and our clinical trial experience. What we do know is that some patients give up too early. So part of our messaging is for physicians and others to set expectations that you can have a breakthrough attack. You might have GI events. The GI events tend to go away after a few weeks of therapy for most patients. It's important that patients don't give up too early. We actually see in 2023 about 10% of the patients starting ORLADEYO were actually restarts. There are people who gave up in the past and came back because they knew that they had given up too early.

And Francois, John can send you the slide, but one of the slides we've had in previous decks shows the pattern of discontinuations over two years, and it's flat. Now we have a pretty good idea of what that pattern is. If we've got you for up to a year, we've got you.

Understood. And then can you just help me understand a little bit the U.S. versus ex-U.S. dynamics in terms of the growth and your assumptions and expectations? Are there challenges, maybe ex-U.S. that aren't happening in the U.S.? Just any color there would be helpful. Thank you.

Sure. First of all, the biggest challenge or time factor is obtaining market access in markets outside the U.S. This process takes time, and we have countries emerging continuously. For instance, we've gained market access in several European countries like Germany, the U.K., and France a few years back, but we're only now securing access in others such as Spain and Italy. Pricing is significantly lower outside the U.S., meaning it typically requires four to five patients abroad to equal the value of one patient in the U.S. Our strategy is primarily focused on volume in these markets. In the places where we have market access and have launched, we are observing a consistent trend in patient additions, influenced by the dynamics of the HAE market. Sometimes this involves patients switching from other prophylactic treatments, and at other times, it’s about expanding the prophylactic market with a drug like ORLADEYO. Ultimately, we anticipate that our international revenue will reach approximately $200 million out of $1 billion in total sales, and our current observations give us confidence that we will achieve this target.

And if TechSiro is an analog here, right at the time that the U.S. starts to flatten out, the ex-U.S. continues to grow, so you have overall growth of the brand still. So that's what we're expecting right now.

Understood. Thank you very much.

You're welcome.

The next question comes from Maury Raycroft with Jefferies. Please go ahead.

Hi. Good morning, and thanks for taking my questions. Just wanted to ask a clarifying question on the seasonality this quarter. Is it for the same reason as in the first quarter '23, where there were budget issues with external charities which increases the number of patients on the free drug program? Or what are you seeing this year so far?

Sure, Maury. The Medicare issue is something we have some insight into, but it's not resolved yet. It doesn't seem to have worsened, but we're still working on it. We believe that with the IRA fully implemented next year, the budget issue will be more settled by 2025. The primary reason for the decline in Q1 is the higher percentage of patients needing reauthorizations. When that occurs, we have to temporarily revert many patients to free product. Additionally, the first quarter impacts gross to net the most because we assist with patient co-pays, which primarily takes place in the first quarter. We expect to see a corresponding increase in the second quarter when those patients transition back to paid.

Got it. Makes sense. And one other quick question. What proportion of the 321 new patients are on short-term quick start? And how long on average does it take to convert these patients to long-term pay patients?

The 321 million was the net growth across the whole year. What we did say is that we ended the year with 1,104 patients on either paid therapy or long-term free product. There was also a sizable chunk of patients on short-term quick start, new patients coming in. We get the product out very quickly. For most patients, we get them to either paid or from free product within about a month.

Got it. Okay, thanks for answering my questions.

You're welcome.

Your final question today comes from John Wolleben with Citizens. Please go ahead.

This is Catherine on for John. I had a question about how you're thinking about profitability versus your earlier pipeline prioritizing those. And then just a question about the data coming? Is it still coming in midyear for the PNH trial? Thanks.

Yes. I think we've been very clear about our past profitability. Very excited to get to the point where we're independent of capital markets. We've been seeing over the past years that convergence of the lines between revenue and OpEx. We continue to see it this year and beyond. Generating an operating profit this year, getting towards both cash positivity and EPS at the end of next year, and then achieving it in 2026 puts the company in a right spot. We do that at the same time as continuing to invest in that early-phase pipeline. The two things coexist, actually. The opportunity to invest in whatever we can do to move as fast as we can in those periods because that early phase pipeline that we generated in or that we announced in November is early phase and puts us in a spot where the expenditure within the next kind of three years is not as meaningful as it would be when you get them to pivotal trials. The company is in a great spot. If there's anything we can do to accelerate, we absolutely will.

And there's nothing to update on BCX10013; nothing has changed on the timeline.

Thank you.

You're welcome.

This concludes our question-and-answer session. I would like to turn the conference back over to Jon Stonehouse for any closing remarks.

So one of the things that we're hearing from investors is they have so many things coming at them, and it's hard to keep up with the opportunities to invest in. If you're in that camp, a question you may want to stop and ask yourself is how many companies do I have in my portfolio that have a growing product, a discovery engine that created the growing product, a pipeline that came from the discovery engine that's going to create another growing product or more and has an accelerated path to profitability, where we're probably going to be cash flow positive or near that in the second half of next year. If the answer to that is none or too few and you want to diversify your portfolio, reach out to us. We're happy to get you up to speed on our company and answer any questions you may have. So have a great day, and thanks for your interest in BioCryst.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.