BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX) Q2 2023 Earnings Call Transcript

BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX) Q2 2023 Earnings Call Transcript August 3, 2023

BioCryst Pharmaceuticals, Inc. misses on earnings expectations. Reported EPS is $-0.24 EPS, expectations were $0.25.

Operator: Good morning and welcome to the BioCryst Second Quarter 2023 Earnings Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference to Mr. John Bluth at BioCryst. Please go ahead.

John Bluth: Thank you very much. Good morning and welcome to BioCryst’s second quarter 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 R&D Officer, Dr. Helen Thackray. Following our remarks, we will 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.

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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 release section of our Investor Relations website at biochrist.com. I’d now like to turn the call over to Jon Stonehouse.

Jon Stonehouse: Thanks, John. The strong step-up in revenue that we expected and achieved in the second quarter and the consistent steady growth we continue to see in patients on treatment, positions us well to achieve no less than $320 million in ORLADEYO of revenue for the year and $1 million at peak. Charlie will share more of the details, but I want to point out the success Charlie and his commercial team have had in a rare market, where there are many treatment options for patients and yet they’re still switching to ORLADEYO. That is great execution by the entire team. Charlie and I also recently attended the US HAEA Patient Summit in Orlando, Florida. This was the first major gathering of US HAEA patients since 2019, which was before the approval of ORLADEYO.

Our record 1,200 HAE patients and their families were in attendance and it was an amazing opportunity for us to showcase our company and make connections with this community. Patient activation is a major part of our strategy and this event was a fantastic launching pad for that. Lastly we’re very excited about the progress we’re making with our pipeline. We will host an R&D day on November 03 at our labs in Birmingham, Alabama. We plan to show you much more about additional assets and programs we haven’t discussed previously. Our hope is you will see more clearly how our structure-based drug design platform focused on pursuing first-in-class or best-in-class medicines for patients with rare disease allows us to spread the inherent risk of drug discovery across multiple programs, targets and diseases and increases our probability to get at least one of them to the market to follow the success of ORLADEYO.

We look forward to sharing more with you in November. Now, I’ll hand it over to Charlie.

Charlie Gayer: Thanks, John. Second quarter results for ORLADEYO rolled out as we expected. The long-term linear growth in patients on therapy continued and revenue jumped following the first quarter prescription reauthorization process. I’ll provide more color on both. Growth in patients treated with ORLADEYO continued at the same consistent pace we’ve seen over the past two years. After a strong first quarter in the United States for net patients added to therapy, we added about the same number of patients again in the second quarter. I noted at the last earnings call that we had crossed a 1,000 patients on therapy in the U.S. As you would expect, we are above that total now. This is what linear growth looks like. We also made great progress in getting patients to paid therapy, adding the most net paid patients in a quarter since Q2 of last year.

In fact, we added the exact same number of net paid patients as a year ago. We also had a very similar number of discontinuations as in the second quarter last year, even though our current patient pace is significantly larger. So the discontinuation rate continues to go down again, linear growth. As we forecasted, revenue took a substantial jump in Q2 over Q1, just like it did a year ago. The biggest driver was the continued growth in our patient pace, but we are also improving our ability to get patients to paid therapy. In January and February, for example, roughly 34% of patients were on free product during the heavy reauthorization period. That fell to about 32% by the end of March. By the end of Q2, the percentage of patients on free product fell to 30%.

So we made a lot more progress after reauthorizations were completed. Every percentage point of our current patient pace that we move to paid therapy is worth about $4 million in annual revenue. So these improvements are very meaningful. Based on the trends we see in the work our team is doing, we expect to see continued steady improvements in that percentage over the next few years. We are confident we will reach our long-term goal of getting over 80% of U.S. patients on ORLADEYO to pay status. The bottom line in the U.S. is this. We are growing total patients on therapy at a very consistent rate every quarter, just as we have done since launch. And we are getting even better at moving patients to paid therapy. For the rest of 2023, we expect revenue to track along with steady patient growth to reach no less than $320 million in global revenue for the year.

In future years, you can expect the same pattern based on patient growth trends and insurance seasonality, Q1 revenue being slightly down based on reauthorizations, Q2 being a larger bump in revenue and steady growth in Q3 and Q4. The U.S. currently accounts for about 90% of global sales, but this may overshadow how well we are doing in Europe and the rest of the world. What we are seeing right now in Europe is very similar to the U.S., steady quarterly growth in patients on therapy. We are laying the groundwork for similar patient growth trajectories as we launch in more and more countries around the world, on the way to 20% of peak global sales coming from markets beyond the U.S. As Jon said earlier, we recently attended the U.S. HAEA Summit in Orlando along with 1,200 patients and their family members.

Their interest and enthusiasm showed us how much demand there is for an oral, one-daily prophylaxis therapy. We’re seeing the same thing around the world. Our teams and our partners in North America, Europe, Latin America and the Middle East are doing phenomenal work to bring ORLADEYO to patients who need it. We keep growing and we keep improving. I am still proud of our global teams and how they are bringing this transformative therapy to patients living with HAE all over the world. Helen, I’ll turn it over to you?

Helen Thackray: Thanks, Charlie. It was exciting to hear from so many patients at the HAEA Summit. Hello, the burden of injectable therapy is especially difficult for children. That is why we are focused on a future pediatric indication with oral, once-daily ORLADEYO in the APeX-P trial, including evaluation of a new formulation using granules to best meet the needs of children with HAE. APeX-P is up and running at multiple sites, and I am pleased to note that enrolment is proceeding as expected. Turning now to the pipeline, we are looking forward to our R&D Day in November, where we will share with you details on new programs and molecules that you haven’t seen before. Our goal with our pipeline is to bring first-in-class or best-in-class molecules to patients with rare diseases and to have a second product and more following that, which we bring to market as we did with ORLADEYO.

As we focus our investments across multiple molecules, targets and rare diseases that meet our criteria, we are diversifying risk by adding to our options and discovery in early development. Adding these options then increases our overall chances for success in achieving that goal of bringing additional products through registrations and to patients. As you’ve seen, we are also disciplined about decisions to invest in later stage products, which are proportionately more expensive. We won’t accelerate R&D spending for a pivotal program until we have clear data that we are likely to have a first-in-class or best-in-class molecule. This is our approach with BCX10013. We want to see data that shows BCX10013 is an oral, faculty inhibitor with one daily dosing, excellent safety, and efficacy that is as good or better than the other options for patients.

If the data show, BCX10013 has this profile, this is the profile of the best-in-class molecule, and we will invest to run pivotal trials and bring it to market. If the data show, we don’t have a best-in-class molecule here, we will stop development. It is early, and there is still plenty of unknowns with BCX10013 program, but we do have two updates to share with you today. We have restarted dosing in our multiple sending dose trial in healthy volunteers to add another dose level. We have previously evaluated multiple doses up to 80 milligrams, and also single doses of up to 110 milligrams, where we saw excellent durable control of the alternative pathway at 24 hours post-dose. These data support proceeding with evaluation in patients. Now, we will take our healthy volunteer dosing higher to refine our PK model data set with daily dosing at 160 milligrams for 14 days.

This is in parallel to the work we will do in patients to obtain more robust information for a PK model, and eventually inform pivotal, final pivotal dose selection. We are now also proceeding with our dose ranging trial, BCX10013 in patients. We expect to begin enrolling patients by the end of the year with initial data available next year. We are conducting this trial in patients, and we have chosen to work in PNH for evaluation of both alternative pathway activity and clinical outcomes. To determine if we have a safe, effective, one-stale dose that meets our criteria to move forward into a pivotal program in renal, complement mediated diseases like IgAN. Beyond BCX10013, we continue to build and advance our early pipeline as we invest in discovery for new targets.

We are now ready to share our exciting progress with a growing pipeline of molecules and we look forward to doing this at our R&D day in November at the BioCryst Discovery Center of Excellence in Birmingham, Alabama. Now I will turn the call over to Anthony.

Anthony Doyle: Thanks Helen. Global ORLADEYO revenue for Q2, coming in at $81 million, we saw the step up that we anticipated from Q1, based on the strong second quarter revenue performance and continuing underlying patient growth and similar to last year’s quarterly cadence, we anticipate that revenues will increase in the third and then again in the fourth quarter. Year-to-date ORLADEYO revenue is at over $149 million. We expect revenue in the second half to come in at approximately $171 million or an average of $85.5 million over the next two quarters and we’re confident that we will achieve our revenue guidance of no less than $320 million for the year. You can find our detailed second quarter financials in today’s earnings press release and I’d like to call your attention to a few items.

Total revenue for the quarter came in at $82.5 million, $81 million of which came from ORLADEYO. Of that $81 million of global ORLADEYO revenue, $72.8 came from US sales with the remaining $8.2 million coming from ex-US, increases of 24% and 26% over Q2 of 2022 respectively. Operating expenses, not including non-cash stock compensation for the quarter, were $90.4 million, flat to Q2 of 2022, R&D investment for the first half of 2023 reduced significantly compared to the same period in 2022 and we expect that trend to continue and that R&D investment in the second half of 2023 will be lower than in the second half of 2022, even as we factor in the additional trials for BCX10013 that Helen discussed and continued investment in our pipeline that we will share more about at the R&D Day and November.

We reiterate our full year OpEx guidance at $375 million for the year flat to prior year. Cash at the end of the second quarter was at $415.7 million, that includes net proceeds of $26 million from the Pharmakon refinancing that we closed in April, a deal that moved our debt repayment date out into 2028, gave us greater access to capital and improved our terms. Net operating cash utilization for the quarter improved from $28 million in Q2 of 2022 to approximately $13 million last quarter, primarily driven by our increased revenues. GAAP earnings per share for the quarter were negative $0.40, that includes the impact of an approximately $29 million debt extinguishment charge following the refi with Pharmakon. Adjusting this one time charge out on a pro-forma basis, earnings per share came in at approximately, negative $0.24 for the quarter.

With the continuing strong performance of ORLADEYO, as we move towards our 2023 goal of no less than $320 million on onwards to peak sales of $1 billion, OpEx flat to prior year, while continuing to invest in advancing our pipeline, all combined with our strong capital position, we’re in great financial shape to generate value as we move the company forward. Now, I’ll pass it back to Jon.

Jon Stonehouse: Thank you, Anthony. So we had a great quarter, whether it’s the ORLADEYO performance or the advancing of the pipeline and that is a direct result of great execution, and so I want to thank the BioCryst employees for that. We plan to report Q3 earnings on November 02 from Birmingham the day before our R&D Day and we are very excited to host some of you at our labs in Birmingham, Alabama. We’ve got limited space, so the rest of you will be able to participate via webcast. Some of you may be asking why are we holding this on a Friday afternoon in Alabama, and there’s two main reasons. One, we found that when you’re there and have hands on seeing what we do and how we do it and meeting our scientists, you have a better appreciation for what we’re capable of doing.

And the second reason is Saturday the next day after for those of you who are college football fans or not, there’s a pretty important game down the road in Tuscaloosa where LSU is coming to play Alabama. So we look forward to hosting our R&D Day on November 03 in Birmingham, Alabama. And that’s it for our prepared remarks. We’re now going to open it up for your questions.

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Q&A Session

Operator: [Operator instructions] Our first question comes from Tazeen Ahmad with Bank of America. Please go ahead.

Tazeen Ahmad: Hi guys, good morning and I’ll start looking for a flight to Alabama. I wanted to maybe get a little bit of color on how you’re thinking about the second half of the year for ORLADEYO trends. Now, you were specific about saying that you expect to see some growth in the third and fourth quarter. I think people would be just at knowing how your growth, which is very strong, could turn into outside growth in coming years. And where do you see your areas of real unmet need now that you’re fairly mature into this launch? What are your focus areas for your marketing team, for example, and where do you think most of the upside is going to be coming from? Thanks.

Charlie Gayer: Sure. Tazeen, I can take that. So first of all, the question about the second half of this year, so we expect the revenue to go up at the pace of the additions of patients on therapy. So as I’ve talked about, we’ve had really consistent growth in patients on therapy, so that’s what’s going to drive the growth in Q3 and Q4 just as it’s done since launch. And as far as your question about the unmet need, the opportunity, what we know is that all things being equal, the great majority of HAE patients would rather treat their disease with one pill once a day and so the unmet need is to get all the people who haven’t tried yet to try ORLADEYO and a lot of those are patients who are taking other prophylaxis therapies, injectable prophylaxis. So we’re going to keep focusing as our number priority on giving them the chance to switch over and try ORLADEYO and seeing how much more they can benefit by treating their disease with an oral drug.

Jon Stonehouse: Charlie, I’ll add, when we were at the patient summit in Orlando, one of the things that we had a challenge with at the launch was patient activation because of COVID and what we heard from patients is, the first time they were aware that it was approved and available to them. And I think the more that we get going Tazeen, I think that’s potential for continued growth. But the bottom line is there’s a lot of good drugs out there that people are controlled on. And so it’s tackling it, doctor by doctor, patient by patient to get them to want to try it because if it works for them, it’s way better than being injecting yourself.

Tazeen Ahmad: Okay, Jon, thanks for that. And, you have reiterated your confidence in reaching $1 billion in peak. Do you have a sense of how long it would take from where you are now to reach that goal?

Anthony Doyle: So I think what we’ve said before, we’ll say again on this Tazeen, is you can draw a line between our year one revenue of about $122 million, $250 million last year and $320 million this year. And that’ll give you a pretty good sense of when we expect to get to $1 billion. It’ll take — it’ll take some more years based on what Jon was just talking about. So, moving this market takes a while, but everything we see in our forward-looking market research as well as the results that we’re putting on the board gives us great confidence that we’re going to get there.

Jon Stonehouse: And that line crosses $1 billion around the turn of the decade. And remember we have patent protection out to 2039, so we’ve got almost another 10 years of protection at peak. So that’s real value.

Operator: Our next question comes from Chris Raymond with Piper Sandler. Please go ahead.

UnidentifiedAnalyst: Good morning. This is Nicole [ph] on for Chris. Thanks for taking the question. Maybe just around the 10013 program, I know you guys are going to evaluate a higher dose and healthy volunteers. I guess just any color around maybe how that translates to the dose and preclinical models where you observe the chronic toxic signal. And then just to clarify, I guess, have the chronic toxic experiments been completed at this point?

Helen Thackray: Yeah. Good morning. So I’ll going to take those in reverse order. In terms of the chronic toxic, we had a chronic toxic program, it’s still ongoing and we don’t expect that to complete until later in the year. In terms of the information and translating that to effect, what we really, what we know is from healthy volunteers where we see that the clinical the compliment pathway is inhibited to greater than 97% at 110 milligrams and we need to go into patients and we’ll do that with our patient trial and P.A.N.H. to assess further information around [indiscernible] inhibitions. At that end, and dose escalating as well as then how that translates into clinical outcomes, so that we can confirm the dose.