Earnings Call Transcript - BCRX Q4 2020

Operator, Operator

Ladies and gentlemen, thank you for standing by, and welcome to the BioCryst's Fourth Quarter 2020 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mr. John Bluth with BioCryst. You may begin.

John Bluth, Speaker

Thanks, Stephanie. Good morning, and welcome to BioCryst's fourth quarter 2020 corporate update and financial results conference call. Today's press release is available on our website.

Jon Stonehouse, CEO

Thanks, John. Good morning to all of you, and thanks for joining us. Meaningful value is created by companies that translate great science into clinical benefit, leading to approvals and successful market launches of new medicines that patients are waiting for. And the most successful biotech companies are able to repeat this process of discovery, development, and commercialization across multiple drugs in multiple disease areas. Building this capability doesn't happen overnight, but when you make this transformation, you see real change and real value. That transformation is happening right now at BioCryst. We know patients with rare diseases are waiting for oral treatments, despite having injectable therapy to manage their disease. We've heard that for years in HAE and are hearing the same thing in PNH. We have built an exceptional drug discovery platform to go after challenging targets, like kallikrein inhibitors, Factor D inhibitors, and ALK-2 inhibitors, so that we can take this great science, get drug approvals, and finally to the market to put an end to the patients waiting. The approval of ORLADEYO in the U.S. and Japan is evidence of this change. Charlie and Megan will describe what we are doing and what we are hearing from customers in the marketplace. And while it's early days in the U.S. launch, they will share why we believe we're off to a good start. Megan will then share with you the even bigger unmet need in Japan for patients suffering from HAE, and how ORLADEYO can have a big impact as the first approved treatment for preventing attacks.

Charlie Gayer, CRO

Thanks, Jon. We invested early to be ready for a fast launch to get patients on therapy quickly and to secure reimbursement access for ORLADEYO. What we are seeing so far is very encouraging. We are wrapping up clinical trial conversions, and a great majority of these patients are choosing to continue with ORLADEYO. We are also seeing strong early demand from new patients. So far, patients on therapy are equally split between clinical conversions and those new to ORLADEYO. And our sales and marketing efforts are filling the funnel quickly. What's notable is we're also seeing as many new patients switching to ORLADEYO from injectable prophylactic projects as those starting prophylaxis on ORLADEYO after previously treating their HAE with only acute medications. This aligns perfectly with our strategy, because we believe ORLADEYO offers significant and sustained attack reduction with a reduced burden of treatment regardless of a patient's background therapy or attack rate. More early evidence that we are off to a good start in addressing the strong pent-up demand is that HAE treaters are embracing ORLADEYO. We have significantly expanded the prescriber base beyond those involved in the APeX clinical trials. Once patients decide to switch to ORLADEYO, our EMPOWER Patient Services team works with them to get started on the product right away. So far, most are starting on our quick start program while EMPOWER helps them through the prior authorization process.

Megan Sniecinski, VP of Medical Affairs

Thanks, Charlie. Medical affairs is partnering closely with Charlie's team to support a successful launch. Our efforts are aimed at increasing physician knowledge and understanding of ORLADEYO. Overall, healthcare providers are embracing the strength of our clinical data and product profile. In particular, the comparisons of how patients do before and while on treatment, like the mean attack reduction from a baseline of three per month to one per month sustained over time, and the attack-free periods many patients are experiencing in our longer-term safety study. We continue to generate additional supportive data, including what we'll share at our upcoming R&D Day, which starts tomorrow.

Bill Sheridan, CFO

Thanks, Megan, and good morning everyone. BCX9930 development program is making excellent progress, and we are excited to advance this novel Factor D inhibitor into advanced development trials across multiple indications in 2021. We are looking forward to a big year. Our overall goal in development of 9930 is very clear, to bring forth an oral monotherapy complement inhibitor treatment for both PNH and additional rare serious and potentially life-threatening diseases, driven by the alternative pathway. Inhibiting Factor D in PNH is important for patients no matter their prior experience with C5 inhibitors. So our goal for the clinical program is to support a label for monotherapy treatment in all PNH patients. This includes PNH patients who are naïve to C5 inhibitors, patients who have had an inadequate response to C5 inhibitors, and patients doing well medically but who want to eliminate the burden of therapy for injections or infusions. In 2020, we shared data from four C5 inhibitor naïve patients treated with 9930 monotherapy with doses escalated to 400 mg twice a day. This data showed that controlled hemolysis was dose-related and that the safety profile was excellent. We have since completed enrollment in the study with a total of 16 PNH patients. Ten were treatment naïve who received 9930 as monotherapy and six were patients with inadequate responses to C5 inhibitors, who received 9930 in addition to the C5 inhibitor treatment. At our upcoming R&D Day, we look forward to sharing the results of the complete Phase 1 dose-ranging trial in PNH. Here's what we plan to have in the data readout. First, we have data from all 16 PNH patients with 10 C5 inhibitor naïve and six C5 inhibitor inadequate responders to at least six weeks of treatment at either 400 mg or 500 mg twice daily, and a range of both clinical and laboratory outcomes including, for example, hemoglobin transfusions, reticulocytes, PNH granulocytes, and LDH, along with safety data from dosing for up to 48 weeks. At the R&D Day, we will also share new market research with you from PNH patients. What you will see will feel very familiar as the insights are very similar to what we saw in HAE patients. There is a tremendous burden of treatment associated with injectables for these patients who want an oral treatment. In 2020, we discussed our plan for dose selection and design considerations for future studies with both U.S. and European regulators. Dose selection for BCX9930 is based on pharmacokinetic/pharmacodynamic modeling responsive in PNH.

Anthony Doyle, CFO

Thanks, Bill. What a difference a year makes. We ended 2019 with $138 million in cash, and we ended 2020 with $303 million, access to another $75 million and upcoming ORLADEYO revenues from the U.S., Japan, and Europe. The strengthening of our balance sheet, which takes us into 2023, allows us to focus on creating value for the company and shareholders by investing in areas that will provide maximum efficiency and return. The main areas that we are investing in continue to be supporting the launch of ORLADEYO globally and investing in the development of BCX9930 across multiple indications, while of course making sure that we have the infrastructure in place to support the pace of progress that we expect. As the CFO, it's also nice to have significant financial flexibility and levers to pull as we move forward. As the launch for ORLADEYO continues to progress, we can make strategic and financial adjustments that correlate with the pace of the revenues being generated. Our investment in Factor D also continues to evolve, and our continuing desire is to move quickly and broadly with the investment in this program's development. As I noted, we will also have the option, if we need it, to draw down the additional $75 million from our existing credit facility with Athyrium. As we showed with the financings that we announced in December, we have future opportunities to access capital with our growing portfolio of assets. Because of these many variables, we are not providing specific revenue or operating expense guidance in the launch period for ORLADEYO. But based on our expectations for revenue, operating expenses, and our option to access the additional $75 million, we believe our current cash runway takes us into 2023. This position of financial strength allows us to focus on execution, to focus on value creation and not on near-term cash needs. That's a new and exciting spot for BioCryst. BioCryst is transforming, and so too is our value proposition. We are a commercial-stage rare disease company, and ORLADEYO will generate meaningful revenue across multiple regions. With BCX9930, the development team is working on a drug that has huge potential across multiple indications. The team in Birmingham continues to discover our next generation of medicines for rare diseases. And we are now in a strong financial position to invest in driving value creation across all of these areas. That's it for our prepared remarks. We'll now open it up for your questions.

Operator, Operator

Okay. Your first question comes from the line of Jessica Fye with JPMorgan.

Jessica Fye, Analyst

Hey, guys, good morning, and hope all is well. I had a few financial questions. First, on Bloomberg, ORLADEYO consensus for this year is around $35 million. Are you comfortable with that number? Second, how should we think about gross-to-nets in the early part of the launch, and could that evolve as you get coverage ramped up? And third, where does formulary coverage stand now, what's your goal for coverage, and when do you expect to achieve it?

Jon Stonehouse, CEO

Thank you, Jess. I'll address the first question, and Charlie, you can handle the next two. Regarding the consensus, as mentioned, we will not provide specific guidance. Our aim is to meet or exceed Wall Street's expectations. We are looking forward to the first quarter, where we will be able to give you a complete quarter's update in our next earnings call. Now, would you like to address the gross-to-net question?

Charlie Gayer, CRO

Yes, absolutely. Hi, Jess. So as far as gross-to-net goes, first of all, just a reminder for everyone that ORLADEYO has the lowest price in the market. And we expect gross-to-net to change over time. As I said in my remarks, early on we're using the quick start program, and we're getting patients on therapy via medical exceptions primarily. And we expect this gross-to-net to evolve in the year as we get more policies out there. So we're being conservative in how we look at gross-to-net for year one, and we encourage other people to be conservative in your estimates for year one. As far as coverage, as I mentioned, we're starting to have some successes with plans putting ORLADEYO on to policy. And we're getting very good feedback from payers in terms of the value proposition of ORLADEYO, and understanding the patient demand for ORLADEYO. So we're really expecting coverage to accelerate this quarter. It's going to be a year-long process for some payers, so it'll continue to evolve but we expect to make a lot of progress in the next quarter.

Jon Stonehouse, CEO

And, Charlie, the other thing you might want to just mention is, in the interim, while we're negotiating for policy, what are we able to do to get paid?

Charlie Gayer, CRO

Yes. So absolutely, so the first thing we're trying to do is make sure the patients get right on therapy right away. And then we're working through medical exception processes with payers. And we've had some early success with that. It's a more labor-intensive process, but it's one that we are working closely with physicians and patients on. And so that's working for many patients.

Jon Stonehouse, CEO

And we get more leverage, Jess, the more we fill the funnel with new starts. So that's a primary focus of Charlie's team.

Jessica Fye, Analyst

Great, thank you.

Jon Stonehouse, CEO

You're welcome.

Operator, Operator

Your next question comes from the line of Brian Cheng with Bank of America.

Brian Cheng, Analyst

Hi, team. Thanks for taking my question this morning. My first question is on ORLADEYO, can you give me an update on the rate of conversion from your EAP and extension studies to the commercial drug? When do you expect the conversion to be fully complete based on what you are seeing so far? And I have one follow-up.

Charlie Gayer, CRO

Sure, Brian. This is Charlie, I'll take that question. So the conversion is just about complete at this point. We set out to make that conversion this quarter, and we're really wrapping that up at this point. And as I mentioned in my remarks, we're seeing the great majority of patients who are on the two clinical trials, plus our EAP, deciding to continue on ORLADEYO in the commercial world.

Jon Stonehouse, CEO

And, Charlie, there's two steps in that process, right? There's converting them to the commercial drug, and then they have to go through the same prior authorization in the insurance.

Charlie Gayer, CRO

That's right, that's right. So what we worked with the clinical sites is getting the start forms for patients. And then they go through the prior authorization. Some of those patients, just like the brand new ones, will go on quick start. And then as I just mentioned, we're working through medical exceptions and ultimately policies for those patients. But we're really encouraged with the progress on the clinical conversions.

Brian Cheng, Analyst

Okay, great. So maybe just one more on 9930, so we'll be getting data with patients getting the high dose at 400 and 500 for at least next weeks, next months, can you remind us if the trials allows the inadequate responders to wean off C5's you're using the 9930 as an add-on? Is there potential for us to see that if like a patient weaning down C5 while they're on 9930? Thank you.

Jon Stonehouse, CEO

Bill, you want to take that one?

Bill Sheridan, CFO

Sure. Hi, good morning. Thanks for the question. Yes, the protocol does allow patients who are inadequate responders to have the C5 inhibitor withdrawn. So we'd like to see everything be stable; it can take quite a while for the hemoglobin to plateau, for example. And it takes a long time for the bone marrow to get to a new steady state. So in each individual, there'll be that opportunity. It's too soon in the study to see that data yet. And it's possible we might have that data later this year.

Jon Stonehouse, CEO

And it's a great question, Brian, because, again, the goal is monotherapy, as Bill said in his prepared remarks.

Brian Cheng, Analyst

Great, yes, I agree. Thank you so much for the answers, looking forward to that data readout.

Jon Stonehouse, CEO

Right.

Operator, Operator

Your next question comes from the line of Gena Wang with Barclays.

David Dai, Analyst

Hi. And this is David for Gena. So, I have a couple of questions. The first one is on the PNH 9930 asset. So, it seems to me that with all 16 patients being treated, is there any new cases of rash being observed? And can you just give some additional thoughts around the mechanisms of the rash?

Jon Stonehouse, CEO

Bill, you want to take that?

Bill Sheridan, CFO

Sure. Last year, we noted some cases of mild rash, which tend to resolve as BCX9930 treatments continue. In fact, there is an increase in acidosis on day 15 according to the protocol. We will provide an update during the R&D Day call with new data soon. This has not presented a problem. Regarding the mechanism of action, our extensive research, including insights gained from the development of berotralstat, showed a few similar cases. It's rare to determine the benign nature of these issues and pinpoint the exact mechanism. Therefore, we don't anticipate needing any laboratory investigations, but we will examine the mechanism, which is something that seldom occurs.

Jon Stonehouse, CEO

But the main point is it's benign, it goes away, and you can keep dosing up. So, in our view, it's really non-consequential.

David Dai, Analyst

Yes, that's really helpful. So, another question is around your registration of trial for 9930. I understand that you will probably share some additional color on the R&D Day. I am just wondering if you can share some initial thoughts around the registration of trial. Would it likely be a single-arm trial, or do you just have an arm with the C5 inhibitor to show non-inferiority or superiority?

Jon Stonehouse, CEO

Hey, Dave, you might just want to focus on what's the goal of the label that we are shooting for with the drug and then that can help give them a sense of what we need to study.

Bill Sheridan, CFO

Sure. Just to clarify one thing, at the R&D Day I won't be going into the designs of future studies. When we start studies, we will talk about that later this year. At the R&D Day, we will go over the data from the ongoing study which we are very excited to share with you. The goal for treatment here is to make oral drugs available for every patient with PNH as a monotherapy. So, that means that we will probably have to do more than one study because there are people who are not currently on C5 inhibitors for various reasons. There are also people who are currently on C5 inhibitors. Some of them are not doing well and having inadequate responses, and some of them are doing okay. But oral drugs have path for traction that we would like to be able to cover all the bases. You can look at other sponsors' studies that are published, and there's a history of controlled clinical trials, and I feel that will give you some guidance as to where the standings are.

Jon Stonehouse, CEO

I think the most exciting part is we are going from Phase 1 study into the pivotal, and Bill and his team have done a fantastic job of being creative and getting us to accelerate. That's going fast.

David Dai, Analyst

Well, thank you for the color.

Bill Sheridan, CFO

You're welcome.

Operator, Operator

Your next question comes from the line of Brian Abrahams with RBC Capital Markets.

Unidentified Analyst, Analyst

Great. Thanks for taking my questions. This is Stephen for Brian. Those early days in rollout, can you share whether ORLADEYO uptake is even across severity? With mild and severe patients equally represented there? And can you break down on whether new patients are coming from general practitioners or specialists? Thanks.

Charlie Gayer, CRO

Sure, Steve. It's Charlie. As I said in my prepared remarks, Steve, we are really pleased with the breakdown of patients thus far. We are getting an equal split with people coming from switching from injectable prophylactics and those who are treated with acute only and then coming over to prophylaxis for the first time now that ORLADEYO is available. As far as the prophylactic switches, we can't comment specifically on the severity of those. They were on prophylaxis already. So, they are pretty severe, but what our clinical data shows is that regardless of what background therapy, regardless of treatment rate, patients across the board do well on ORLADEYO.

Jon Stonehouse, CEO

And then, the second question was the doctor prescribing, is it GP or specialty?

Charlie Gayer, CRO

Yes. At this point, it's predominantly a market treated by allergists/immunologists. And we know where those doctors are. And we are really excited because we are moving well beyond the group that did our clinical trials. And we are seeing real uptake in a broadening base on those specialists. Eventually we will get some GPs and others too. But right now, we are focusing on the big top prescribers.

Jon Stonehouse, CEO

Your question is insightful. One advantage of COVID is that you aren't driving to the next clinic or flying on an airplane. To elaborate, as Charlie mentioned, the initial phase of the launch targets high prescribers, but we can gradually reach out to others over time, and conducting this remotely or virtually is definitely beneficial.

Unidentified Analyst, Analyst

Thanks.

Jon Stonehouse, CEO

You're welcome.

Operator, Operator

And your next question comes from the line of Maury Raycroft with Jefferies.

Maury Raycroft, Analyst

Hi, good morning, everyone. Congrats on the progress, and thanks for taking my questions. My first question was on 9930 data at your R&D Day, I guess how should we think about hemoglobin variability and the bar for success on hemoglobin measures for the naïve and experienced patient populations?

Jon Stonehouse, CEO

Bill, you want to take that?

Bill Sheridan, CFO

Sure. Hi Maury, thank you. It's an interesting question. The leading physician to treat PNH patients have started to think about, 'What are the goals of treatment in the era of introduction of proximal complement inhibitors into clinical research?' And there's a publication on that that talks about grades of benefits. So, controlling transfusions, and having people not be dependent on transfusions is a big goal. And to do that, you need to stabilize the hemoglobin. It's clearly better for people if their anemia is relieved and their fatigue improves. So, I think controlling transfusions and having the hemoglobin go up in that publication, early publication is a good start-up. There are various metrics included for hemoglobin, including eight grams, 10 grams, and 12 grams per deciliter. So, I don't think there is a single magic number, is the answer. The goal here is to control the transfusions and improve the anemia and improve the symptoms of the disease.

Maury Raycroft, Analyst

Got it, okay. That's helpful. And then, on clinicaltrials.gov, the estimated enrollment for PNH was relatively high. Just wondering if you can provide any insight into the enrollment rate for this study and remind us on rationale for why you didn't add more sites for this…

Bill Sheridan, CFO

Thank you. This was an innovative design that included PNH patients in our Phase 1 first-in-human study. We began with healthy subjects for the single-ascending dose and multiple-ascending dose, and Part 3 of the study was redesigned in a very flexible manner. At the outset, we were unsure of how many subjects would be needed to complete the dose ranges. Therefore, we allowed for the possibility of multiple cohorts starting at different doses, which we determined as we progressed. We also aimed to study several patients with a history of inadequate response to C5 inhibitors, as well as some who had never experienced a C5 inhibitor before. This flexibility meant that we did not have a specific number in mind; instead, our trial design provided a good range. Ultimately, we needed no more than 16 participants to achieve our objectives.

Jon Stonehouse, CEO

Yes, that piece is really important. We always put numbers. So, we don't have to add amendments to increase the study size; 16 was plenty to figure out the dose. And the other thing is it's a rare disease. So, you can't use these patients in the next study. So, if you over-enroll in early studies, you have more of a challenge in recruiting for the later studies.

Maury Raycroft, Analyst

Got it. That makes sense. And maybe last quick question. So, you've talked about providing clarity on additional indications to pursue with 9930 that you could move directly into Phase 2 with, and it sounds like we could learn more about this at your R&D day. I guess, just clarifying if that's the case, if we should expect an update on that. And then, can you say if you've already reached some alignment with regulators? I'm moving directly into Phase 2s.

Jon Stonehouse, CEO

Bill, you want to take that?

Bill Sheridan, CFO

Sure. On the first question, with regard to the products' indications and other indications, at the R&D day, we will go over the field and how exciting it is and what the opportunities might be. We won't be specifying exactly what we're including in our nephritis studies until we start them, because we've seen very competitive figures, and don't advertise exactly what we're doing before it's absolutely necessary. With regard to the second question on interactions with regulators, we had very good interactions last year, and the two key topics were how do we pick a dose for pivotal trials, and that's based on pharmacokinetic/pharmacodynamic modeling, and we've got alignment on that; and the second was just general design considerations around pivotal studies and moving directly from the Phase 1 dose ranges into pivotal studies in alignment around those general considerations. So, we need to finalize those designs, wrap that up, and then later this year we'll be in a position to start.

Jon Stonehouse, CEO

This is another efficiency, Maury, in terms of being able to do a dose-ranging study in PNH patients in Phase 1 and then have the dose to be able to go into other indications; that really accelerates the program.

Bill Sheridan, CFO

Yes, that's an important point. The activity is not related to the specific mutations in any of these diseases. There are various factors that can disrupt the complement system and trigger the alternative pathway, ranging from PIGA mutations and PNH in bone marrow stem cells to germline Factor H mutations, among others. None of these mutations are effective on their own. Essentially, it is the enzyme responsible for initiating the alternative pathway, and the aim is to use an adequate inhibitor of Factor D for PNH at the right dosage.

Maury Raycroft, Analyst

Got it. Thank you very much for the perspective, and congrats again.

Jon Stonehouse, CEO

Thanks, Maury.

Operator, Operator

At this time, there are no further questions. And I'll now turn the call over to Mr. Stonehouse for concluding remarks.

Jon Stonehouse, CEO

So, first off, let me again thank you for joining us. This is a really exciting time at BioCryst. And so, we look forward first off to sharing the 9930 Phase 1 dose-ranging data with you at our R&D day on March 22. And we also look forward to sharing the first full quarter of ORLADEYO sales at our next earnings call. So, as I said before, the transformation in this company is happening now. And we hope that we've gotten your interest, and if you would like to reach out to us, we're happy to connect with you in the meantime. So, thanks again, and have a great day.

Operator, Operator

This concludes today's conference call. Thank you for participating, and you may now disconnect.