BioCryst Pharmaceuticals Q3 2023 Earnings Call Transcript

Quartr
Provided by Quartr
November 2, 2023

There are 13 speakers on the call.

Operator

Good morning, and welcome to the BioCryst Pharmaceuticals Third 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 like now to turn the conference over to John Bluth at BioCryst.

Operator

Please go ahead.

Speaker 1

Thank you, Maria. Good morning, and welcome to BioCryst's Q3 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, John Stonehouse CFO, Anthony Doyle Chief Commercial Officer, Charlie Guyer and Chief Data and Insights Officer, Jinky Roselli. Following our remarks, we'll answer your questions.

Speaker 1

As a reminder, tomorrow at 1 pm Eastern Time, we'll be hosting an R and D Day where we plan to describe our drug discovery process and introduce additional therapies from our pipeline. So today, we'll focus on Orla Deo, and tomorrow, we'll take a deep dive and answer your question on our pipeline programs. Before we begin, please note that today's This call will contain certain 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 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 atbiochrys.com.

Speaker 1

Now I'd like to turn the call over to John Stonehouse.

Speaker 2

Thanks, John. 3rd quarter Orlodeo revenue of $85,700,000 Another strong quarter of performance and gives us a high degree of confidence we will achieve our goal of no less than $320,000,000 for the year and remain on track for the $1,000,000,000 at peak. This growing revenue Along with discipline around our capital allocation put us in a very strong financial position heading into the end of the year. Since we have more time today to Discuss Orlodeo, we'll go deeper into what we see in the market and how we see the market changing over time. As John mentioned, you will also hear from another member of the team today.

Speaker 2

Jinkie has been with BioCryst for over 8 years. Jinkie's title is Chief Data and Insights Officer, but to simply explain her role, Jinkie gathers data across the company and in the marketplace to help us understand the truth of what's really going on, not to look for data supporting what we hope to be true. This is a very important distinction. She will share the data and insights she and her team have gathered around the HAE market in Orla Deo both today and what we that will impact the future. We hope this will help you understand what we see and why we remain confident in our current growth trajectory and the path to peak revenue of $1,000,000,000 Now I'll turn it over to Charlie to talk about the quarter's performance.

Speaker 3

Thanks, John. Patient growth in the Q3 continued at the consistent pace we have described before. The net growth in U. S. Patients benefiting from Erlodeo in Q3 Was nearly identical to what we saw in each of the first two quarters this year and our global growth continued to gain strength.

Speaker 3

As John noted upfront, we are excited to describe our expanding pipeline and its future promise tomorrow. Today, we are excited to The future we see for Oral Lideo. With Q3 revenues of $85,700,000 and the consistent patient dynamics we are seeing, We repeat our guidance of no less than $320,000,000 this year and are as confident as ever that Oradeo is on a path to $1,000,000,000 in peak global revenue. I'm going to describe the pattern of growth that we have seen and show you how we believe this pattern will translate to that peak. Jinkie will describe in more depth how we validate these forecasts.

Speaker 3

As a side note, I first worked with Jinkie at another company starting in 2007. She is the main reason I joined ViaCryst right behind her in 2015. I joined not only because I enjoy working with her and her team, but because they do objectives, insightful, Patient focused work that I believe tells the truth about the future for Orla Deo as closely as could ever be predicted. Let's look at the data. We included 2 slides in our earnings deck that describe Borolideo growth.

Speaker 3

The first, Slide 4, Shows the monthly pattern of U. S. Patient prescriptions and patient discontinuations graphed on the same y axis. You can see that months bump up and down over the last 8 quarters, but the range is tight. New starts to date have been well above discontinuations.

Speaker 3

We have good months, great months, just okay months, leading to trend lines of start forms and discontinuations over the past 2 years that are essentially flat. That means the growth of net patients on therapy remains very linear. Net patients are on the secondary y axis. We have not shown the numbers on the chart, but we crossed 1,000 U. S.

Speaker 3

Patients on Orlydayo in early May And are well above that point now. This U. S. Patient growth combined with reimbursement dynamics, shipping days and other factors create variable revenue patterns You can see on the right slide of Slide 4. Q1 tends to be down because of reauthorization, Q2 jumps up after reauthorization is complete and Q3 and Q4 tend to go up more gradually.

Speaker 3

However, the long term revenue trend follows the patient growth So where is Oralideo heading? Slide 5 shows you what we expect based on what we see today. I'll walk you through some simple numbers that are representative of our data and our view. I've simplified and approximated the numbers, But precision is not important because the long term view does not change. We expect to end 2023 with roughly 1050 patients Who have reached a state of either paid therapy or long term free product or PAP.

Speaker 3

We also have newly prescribed patients on short term quick start free product at any given time and when you include them, the proportion of patients on paid product It's just under 70%. I'm going to exclude the Quick Start patients because the coverage for them is still pending. That leaves us with a paid patient ratio of about 73%, which is what I'll use for this analysis. The 1050 year end patient base multiplied through a compliance rate of just over 90% And a gross to net reduction of 15% to 20% off last WACC list price on paid patients gets to an annualized rate of about $310,000,000 per year. Our patient growth history plus Forecasting methods that Jinkie will describe give us confidence we will average around 200 Net patient additions per year through 2028.

Speaker 3

We have averaged a bit above that rate for the past 2 years and I've shown you the consistency. Growth could be more some years, less others, but we expect to add 1,000 net patients by the end of 2028, which adds up to an additional $295,000,000 in annualized revenue. By the end of 2028, we are looking at a minimum of just over $600,000,000 annualized U. S. Revenue without any other changes.

Speaker 3

But we also expect The 73% paid ratio to grow to 85% based on the work we are doing and the trends we are seeing. Most of that percentage improvement plus the revenue growth impact will not happen in 2024. The percentage growth will accrue over the next 3 to 4 years. With over 2,000 patients that Improvement would be worth at least $100,000,000 per year by 2029, making steady U. S.

Speaker 3

Revenue around $700,000,000 per year. Now assume a very modest average annual price increase through early 2029 And you can see how U. S. Revenues are likely to reach $800,000,000 or more in 2029. The early trends we see outside the U.

Speaker 3

S. Give us confidence that Orlodeo will reach around $200,000,000 in the rest of the world, Completing the path to $1,000,000,000 in global revenue around the turn of the decade. The results They continue to want today. Jinkie will tell you more about how we use robust insights on patients and healthcare providers to predict where Orlodeo is heading. Jinky, welcome to today's earnings call.

Speaker 4

Thanks, Charlie. We truly believe that robust And thoughtful methods are critical in providing an understanding of not only the drivers of demand for Orla Deo, but a complete unbiased reflection of the overall Charlie has mentioned in past calls, our quarterly market research studies showing consistent strong demand for Orlodeo. These quarterly studies survey a robust and generalizable sample of HAE prescribers and HAE patients. A key question we ask consistently in these studies is potential prescribing over the next 12 months. We feel this prescribing ORILDEO to about 25% of their patients in the next 12 months.

Speaker 4

These data on future prescribing of ORILDEO Have been consistent study over study, reinforcing our assumptions that demand remains strong. We do recognize that the HAE market is competitive and is likely to get more competitive. Our market research shows that products with a Strong value proposition are sticky, meaning prescribers and patients are loyal. Across our volumes of research over the years, HAE patients have consistently expressed how grateful they are for every new therapy available to them, which is totally understandable given HAE is a rare disease with historically limited options. These patients have also indicated a high level of satisfaction with their treatments.

Speaker 4

When our quantitative data pre launch Should this level of satisfaction, I admit I did have a moment of panic. In past Markets I've studied when customers are highly satisfied, the implication is that there are no remaining unmet needs. But digging further into the research, when these highly satisfied HAE patients were offered the promise of an oral therapy, Over 50% were willing to switch from their existing prophylactic therapy to Orlydeo. Patients' willingness to switch to Orlydeo signal that there are still unmet needs, namely controlling their attacks As no treatment is perfect and treatment burdens associated with their current injectables. The core insight here is that these patients are And will therefore always indicate high levels of satisfaction.

Speaker 4

Simply stated, these HAE patients are seeking a freedom And an improved quality of life. As we continue to mine our actual Orla Deo data and study our sources of business, we do see this stated in research proving out in our population. Top three reasons our Actual patients have stated as reasons to switch to Orlydeo include wanting to reduce number of attacks, wanting to reduce severity of attacks and wanting to reduce the burden of current treatment. Their motivation for switching is wanting more. The reason for staying on therapy based on research with current patients is essentially the same, less frequent and severe attacks In addition to the convenience of an oral, which reduces the treatment burden.

Speaker 4

Assumptions for our forecast rely heavily on insights from market studies, our conjoint work and ultimately simulation models. Collectively, these approaches help us quantify demand and uptake not only for Orla Deo, But also impact of the competition. Unlike traditional mass markets, rare disease markets rarely have data to build forecast upon. Hence, we supplement and collect as much data as possible through primary methods to fill these gaps. In our most recently completed conjoint study, our sample included 175 HAE treaters and 100 HAE patients.

Speaker 4

We asked stakeholders to allocate brand preference in terms of current use and their potential future use, including the competition in their choice sets. We then analyze these preference data and incorporate them into market models driven by Monte Carlo simulation. Our simulation models Hundreds of iterations in the simulator and the models continue to reinforce confidence in reaching 2,000 patients at peak In the U. S, even with competition entering the market. In the near term, the model confirmed by actuals has shown strong uptake with its source of business from PROFINAIEVE and PROFISWitches.

Speaker 4

In the outer years to peak, Assuming conservative scenario that all investigational products reach the market, our research consistently shows that new injectable products We'll take share mainly from current injectables by claiming the convenience of less frequent injections. Despite that, our model sees TAKHZYRO remaining as the leading injectable product because less frequent injections are an incremental benefit That will not be sufficient to drive many patients to switch. Switching from an injectable to oral, however, offers a much more dramatic benefit to many patients. Our model anticipates that Orlydeo We'll most likely be insulated from these new injectable entrants. Likewise, our research and model anticipate minimal Switching away from Orla Deo to any new oral because any new product is unlikely to offer a meaningful benefit over what they already experienced with Orla Deo.

Speaker 4

Similar to how TAKHZYRO remains sticky, As a sticky market leading injectable in the outer years, our research and data show that Orlydeo will be equally sticky as the market leading oral. We strongly believe in continuous optimization of our forecasting methods. Post launch, our models have evolved with additional levels of sophistication, including We have found historically that our models correlate strongly with actuals and have predicted early day patient numbers and corresponding revenues reliably. Forecasting year 1 of launch is always difficult. The year prior to launch of Orla Deo, our model showed U.

Speaker 4

S. Revenues approaching 100,000,000 And our actual year 1 revenues came in at $122,000,000 Beyond forecasting, our team also studied these data in-depth The availability of these data on a granular level coupled with robust market insights, our team can proactively partner with the commercial teams with the full Our commercial teams are always ready to action on the truth from these data, ready with strategies and solutions to address any of the findings. Quantitative evidence direct from our customers form the basis of all our assumptions. Full market context including the competition are Always incorporated into our thinking, having a strong commercial team ready to action on the data and insights also key. Because we anchor in all these variables collectively, we have a strong level of confidence in our views of future Orla Deo performance and our path to $1,000,000,000 Anthony, I'll turn it over to you.

Speaker 5

Thanks, Jinky. With Q3 Orlovair Revenue coming in at $85,700,000 we are well positioned to achieve our 2023 guidance of no less than $320,000,000 Longer term, Charlie and Jinke outlined the growth factors that we expect in the coming years, giving us great confidence in getting to $1,000,000,000 in peak revenue. You can find our detailed 3rd 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 was $86,700,000 $85,700,000 of which came from Orlodeo, putting Orlodeo trailing 12 month revenue at approximately $306,000,000 Of the $85,700,000 of global Orla Dyer revenue, dollars 75,300,000 came from U. Sales with the remaining $10,400,000 coming from ex U.

Speaker 5

S. Operating expenses not including non cash stock compensation for the quarter were $85,900,000 We are revising our full year guidance for OpEx to $365,000,000 to $375,000,000 Based on current trending and as we continue to be disciplined in our approach to capital allocation. Cash at the end of the 3rd quarter was $399,200,000 and net cash utilization for the quarter was approximately $16,000,000 One of the areas that investors and analysts have been asking for additional information relates to debt and royalties. So let me go into a little bit more detail on them. Looking high level at our balance sheet, total long term debt is listed at approximately $833,000,000 However, only around $300,000,000 of that is traditional debt And the remainder relates to future royalty obligations.

Speaker 5

Earlier this year, we refinanced our term loan with Pharmakon. This 300 It's traditional debt with traditional characteristics, a 5 year term, interest only payments during the loan period, like financial And a bullet payment due in 2028. Separately, between 2020 2021, we secured an aggregate of 425,000,000 for royalty For this instrument, we forecast future revenue and based on that Future royalties payable, which we then use to calculate an effective interest rate. On a quarterly basis, we accrue interest expenses related to this effective interest On the P and L, while between periods, the balance sheet movement is the delta between the interest expense accrued And the actual royalties paid. The amount currently on the balance sheet for this is $533,000,000 meaning we have accrued more interest expense than we've actually paid in royalties.

Speaker 5

At a future point, these balances should decrease as revenues increase and as royalties payable should at that point be higher than interest expense. GAAP reporting, this is considered to be a debt instrument. However, this is not traditional debt. These payments are based entirely on securing Orla Dea revenue, I. E, no revenue, no royalties.

Speaker 5

Additionally, there is no recourse, the balances are not callable and there is no bullet payment. Hopefully, this additional detail helps. We look forward to sharing more exciting information on our pipeline with you at the R and D Day tomorrow, and I hope you can join us then. Operator, We'd now like to open the call

Speaker 2

up for Q and A.

Operator

Thank you. We will now begin the question and answer session. The first question is from Tazeen Ahmad of Bank of America. Please go ahead.

Speaker 6

Hi, good morning. Thanks so much for taking my questions. I have a couple. Thanks so much for providing that really detailed analysis of how you see the market evolving. I think in some of my discussions with investors, I often get asked about the benefits Of Orla Deo versus the ramp rate for the launch itself.

Speaker 6

So while you're feeling a high sense of confidence that By the end of the decade, you'd be looking at $1,000,000,000 What do you think would need to happen to speed up that launch in order for the steepness of uptake And then I have a follow-up. Thanks.

Speaker 2

Erwin, you want to take that?

Speaker 3

Sure. Hey, Tazeen. So first of all, we're really happy with the ramp rate and the consistent ramp rate and where it's headed. So we're always looking for ways to make it go a little bit We've talked about patient activation before. That's definitely one.

Speaker 3

We don't see any one thing that can be done that's going to meaningfully bend it But we just we plan to keep executing really consistently and we're going to get there. And I think when you look at The ramp rate of 200 patients adds per year that is very realistic and very achievable over the next 5 years. So we're happy to keep it just at the ramp it's at.

Speaker 2

Yes. One other thing I'd add Tazeen and Jinky stressed this a lot in her remarks is Remember that there's a lot of competition and patients are very satisfied with their therapy. When we talk to patients, They'll tell us, oh my god, this saved my life, this changed my life, and they're on the injectable therapy. So that stickiness It just takes time to break and get people to understand that they could do better with an oral. But then on the flip side, that's going to work our advantage when other competitors come out.

Speaker 2

So I think the ramp rate is considering the competition in a rare disease is Phenomenal.

Speaker 6

Okay. Thanks for that, John. And then as a follow-up, when you talk about the 2,000 patients as your target, What type of a discontinuation rate is assumed in that? Are those 2,000 patients taking the drug continually or 2,000

Speaker 2

And Charlie, talk about the pattern as well.

Speaker 3

Yes, yes. No, absolutely. And so Tazeen, first of all, the pattern that we've described before has been It's still the same and the slide I showed today, I think demonstrates that. So when a patient starts on Orlydeo, 60% of those patients make it through the 1st year and then we see very little discontinuation after that. There's always a little bit, but Those are the sticky patients really once they make it to a year.

Speaker 3

And so once we get to the 2,000, we see a base of about 2,000 patients being sticky And staying on Orlandeo. And then as we've talked about before, we have patent protection out to 2,039. So it's a long ramp Potentially at peak sales of $1,000,000,000 with those 2,000 patients. And that's just the U. S, The same dynamics will apply in other markets.

Speaker 2

Yes. So you should think that the 2 when we get to the 2,000, we mean They've been on for at least a year or much longer and you're going to lose a percentage or 2 each year, but you're going to get that back in June.

Speaker 3

We're going to replace it, yes.

Speaker 6

Okay, perfect. Thank you.

Speaker 2

Welcome.

Operator

The next question is from Stacy Ku of TD Cowen, please go ahead.

Speaker 7

Thanks for taking our questions. Congratulations on the progress and we really appreciate the detailed analysis of Orla Dao. So first, we have a question. Could you further elaborate on your expectations for consistent linear growth? Specifically, how are you thinking about 2024?

Speaker 7

What are your thoughts on $410,000,000 roughly for consensus? That's the first question. And then one more on this year. So do you have any updated thoughts on your guidance of at least 3 $20,000,000 If there is any potential for outperformance, what factors do you expect could drive greater sales? Is it ex U.

Speaker 7

S? Any kind of detailed around this year would be appreciated. Thank you.

Speaker 2

Yes, Stacy, we don't comment on consensus and we haven't guided yet for next But I do think Charlie made some comments in his prepared remarks that should set expectations. I'll let him talk about that.

Speaker 3

Yes. I think for next year And for the next 5 years, I said we expect to average about 200 patient adds and it could be A little more some years, a little less. It won't be exactly that every year, but with consistent growth, It's going to be pretty close. And on the $320,000,000 we are very confident in the $320,000,000 we've Saying for multiple quarters now, put $320,000,000 in your model, and I think we'd say do the same right now.

Speaker 2

I think the challenge with next year is the Tap to paid. You were not completely sure of how the IRA is going to impact the Medicare patients. There's still infrastructure that Charlie is putting in place and executing on where he's making great progress on the front end of making sure Quick start gets to paid on a higher frequency, but we still have those long term PAP folks that we've got to get switched over to paid. So, I think it was around $100,000,000 Charlie that you said over the next 5 years we'll benefit from the switching

Speaker 3

Yes, the $100,000,000 would come in 2029 After we

Speaker 5

move

Speaker 3

the paid ratio to 85%.

Speaker 2

You shouldn't expect much progress on that

Speaker 8

next year is the point I'm trying to make.

Speaker 7

Okay. And then on ex U. S, what are you thinking there? You had given kind of some guidance around the breakdown, but it looks like There's some nice sales there. So any comments on that would be appreciated.

Speaker 3

Yes. I mean, ex U. S. Is going really well. We continue to get Have market access wins.

Speaker 3

We continue to launch in new markets. We continue to grow in the 1st wave of markets Where we're at, as we've commented before the price is lower. So it's a volume game, it's longer term, but everything that we see ex U. S. Tells us it will contribute that additional $200,000,000 by about the turn of the decade.

Speaker 5

Like Charlie said about the link between patient growth and then revenue similar in ex U. S, There will be some puts and takes, right? There will be some peaks and troughs. There will be quarters that are bigger, quarters that are smaller depending on which Territories we're selling into, but overall, the trend continues to be really strong.

Speaker 7

Thank you so much.

Speaker 2

You're welcome.

Operator

The next question is from Maury Raycroft of Jefferies. Please go ahead.

Speaker 9

Hi, this is Yao on for Maury. Congrats on a successful quarter. I guess Our first question is on patient on free drug program, which went down from 30 4% in Q1 at peak to about 30% by the end of Q2. Can you maybe provide more color What you saw in Q3 and where do you think that will be by year end?

Speaker 2

Charlie?

Speaker 3

Yes. So good question. And we said we were at 30% at the end of Q2. I noted on the prepared remarks today that essentially that number is a little over 30% in Q3. What we saw in Q3 is a couple of factors that affected that and these kind of wobbles are going to happen as we make that long term progress Towards 85 percent paid.

Speaker 3

But in Q3 we saw some Medicaid patients moving temporarily we think to free product As some of the COVID relief funding ended, we also saw it's reenrollment season for insurance companies. And so Some patients actually moved as they're switching plans move temporarily to free product. And then the other piece that is driving up Just a little bit, the percentage of free product is that as we're improving our processes to get people to paid, we're actually slowing down a bit To get better results. So when new patients come in, we're keeping them on the Quick Start program for a little bit longer To make sure that we've got a really comprehensive case for the insurers, so that we actually improve the percentage of paid. And we're seeing that paying off.

Speaker 3

So amongst our commercial segment, which is about 60% of our patients, we now see that over 80% of them Are on paid therapy. And so that's one of those trends that gives us confidence in the long term that we're going to get to 85%. As far as where we're going to end the end of the year, I don't even want to make a prediction. I think it's this is all about that longer term progress. And As John noted, we don't expect a meaningful change in 2024, but the percentage changes will start to improve in 2025, 2627, that's when we'll start to notice

Speaker 9

it. Got it. That makes sense. Thanks so much for the clarification. I guess a quick follow-up On the Q3 sales, we are you now seeing more patients coming from PROFINAIIVE patients or converted patients in the U.

Speaker 9

S? And should we assume maybe more of a revenue growth That you guys are from PROFIN naive patients?

Speaker 3

So in the U. S, the trends are really the same. It's that roughly fifty-fifty split between patients coming over from prophy or prophy naive at least Most recently that they're not on prophy. That has been it's not exactly the same every quarter like anything else, but it's been really consistent over time. Ex U.

Speaker 3

S, yes, we get a lot more patients who are prophy naive because the prophy market in general has trailed The U. S, ex U. S, but that's starting to change. And so we get some switches from other prophy ex U. S, but most of it is people On to prophy for the first time now that they can do it with a targeted oral therapy.

Speaker 9

Got it. Thanks so much for taking our questions.

Speaker 10

Sure.

Operator

The next question is from Brian Abrahams of RBC Capital Markets. Please go ahead.

Speaker 10

Hi, everyone. This is Nevan on for Brian. Thank you again for taking And congrats on the quarter. And we really appreciate some of the color that you gave around some of the Torreypa sales trajectory that you expect On that, I just wanted to ask in Slide 4 some of the data that you had regarding net patient growth also some of the discontinuations. It seems that perhaps some of the discontinuations are leveling off or perhaps maybe changing dynamics.

Speaker 10

Could you maybe speak to whether you are seeing improvements in the retention rates and whether that's affected by Your kind of push to better educate patients. And then I have a quick follow-up as well.

Speaker 3

Sure. No, it's Good analysis of the data. Yes, I think we have seen it improve certainly from what we experienced Very early in the launch and it is exactly that. It's setting expectations. We do that all the way through Everything that we can do with healthcare providers to make sure they talk to their patients.

Speaker 3

When our patient services teams talk To patients, they set expectations and we think that that has really paid off. The market is getting very familiar now With Orla Deo. Physicians and other healthcare providers know the drug, they have confidence in it. Patients now know a lot more and they have confidence in it. And in a condition like HAE where stress can cause attacks, having confidence in your therapy is important.

Speaker 3

So we think That's all part of the pattern settling out and we're very confident in this pattern going forward.

Speaker 10

So in kind of like a follow-up to that, can you also speak a little bit to the trial progress for ORLA DAO in pediatric patients with the Sprinkle formulation. And is there perhaps anything you could tell us about what those retention metrics might look like within the pediatric patients so far? And if there's any differences in the GI talks that you might be seeing in this population?

Speaker 3

So the trial enrollment is going well. I'll defer other questions to tomorrow. In our R and D day, we will be addressing that amongst our other programs. But What I'll say is the trial is going well and there's a huge need there's a need for an oral therapy across the market. As you can imagine in pediatrics, no parent or caregiver likes to inject their child, no child likes to be injected.

Speaker 3

And with HAE, fortunately, a lot of the kids don't become symptomatic till puberty, but about 4 in 10 patients actually have their first attack by age 5. And so there's a huge need To have an oral therapy that can prevent attacks so that these kids can live a normal life And that's what we're shooting for and we think we're optimistic we're going to have a great product to do that.

Speaker 2

And Nevan, A really good indicator of you've got something of real need for patients is when your enrollment goes really well and enrollment is going really well in this trial.

Speaker 10

Okay, good to hear. Thank you all so much and congrats again. Thanks.

Speaker 3

Thanks.

Operator

The next question is from John Wold Hederne of JMP. Please go ahead.

Speaker 6

Hi. This is Catherine on for John.

Speaker 8

I just have quick question about kind of just what's been working well in the ex U. S. Launch of Orla Deo? I know you've kind of hit upon Fact that you're gaining ground with reimbursement dynamics, but any other color you could provide?

Speaker 3

I think Sure. A couple of things. I'll touch on the reimbursement first because that ex U. S. Anywhere getting Access to product, having someone pay for it is really critical for patients to be able to get their therapy.

Speaker 3

So an example that I've cited before in the United Kingdom, Where Orlydeo is covered, NICE approved Orlydeo for patients with 2 attacks, HAE attacks or more per month, whereas other modern prophy therapies like TAKHZYRO were limited Patients with 2 attacks a week or more, which is a very small segment of the market. And so our team has been able to Take advantage of that and really help a lot of patients with Orla Deo. And then I think the other factor is Just what I mentioned on one of the earlier questions, which is until a few years ago, there were there was very little availability of modern prophylaxis outside of the U. S. And so the Patient community, the physician communities in these different markets were just not used to using prophylaxis.

Speaker 3

All they had were androgen steroids or some other very non Specific drugs, now they have access to those drugs and so it's changing how they view treatment. And everyone's aligning around the global guidelines, Which says that one of the modern prophylaxis therapy should be considered for all product all patients and that's what we see happening.

Speaker 2

I think one other thing is like the U. S, Charlie and the GM, Abbott Karim in Europe have Great job of building a really good team, really experienced team that hits the ground running. And while data access And there's some challenges in Europe. They work closely with Jinky's team. And they're just like in the U.

Speaker 2

S, when They see a challenge, they adapt and adjust and it's been really impressive to watch the European team.

Speaker 8

Great. Thank you. And then I just have kind of one more question about pediatric opportunity. I know that you're going to kind of save the developmental pipeline Tomorrow, but just to comment on that.

Speaker 1

Sure. I mean

Speaker 3

just to add a small piece to What I said earlier, the pediatric market in the U. S, I think we've said this before, we think they're in the neighborhood of 500 patients who are probably With HAE and symptomatic, and not all of those will need prophylaxis right away. But The real key with where HAE therapy has evolved is that now there are options. What the experts, they really see patients growing up without in a very different environment than even 10 years ago. So kids today can grow up, they can get control of their attacks, they can do all normal school Activities, everything else, the goal is to be completely normal and that just hasn't happened with previous generations.

Speaker 3

So just The availability of prophylaxis for the pediatric population and we hope soon on oral prophy product Is what's really going to change the lives of these kids and these families, frankly.

Speaker 2

Yes. And I can remember, and this isn't that long ago, 10 years ago, when you would talk to Young women that had HAE and they weren't even sure if they wanted to have children and now you can live with HAE at a very young age And manage your HAE. So we're so excited about this formulation. I mean Bill Sheridan and I have been chased at Patient meetings for a decade from others that are saying go faster, and it's really exciting that we're on the cusp of getting there.

Speaker 8

Okay. Thank you so much.

Speaker 2

You're welcome.

Operator

The next question is from Lisa Lisa Beiko, your line is open.

Speaker 8

Hi there. Sorry about that. I just want to follow-up on an earlier question regarding the linear growth of 200 patients per year. What kind of underlies your confidence that you can continue growing at that rate? How many patients would have cycled through by 20, I guess 29, would all patients have touched Orlydeo at some point?

Speaker 8

Are there benchmarks you can point to? Is that pretty typical to see Discontinued new patient adds at a consistent level from like launch. It seems like at the early launch period, you might have a different trajectory. So why I was just curious about the kind of 200 patients being added per year. Thanks.

Speaker 2

Charlie is going to answer the first part, but I want Jigit to dive in as well because she's got insights into the future as well through the data she's got.

Speaker 3

Yes. And Lisa, we realized that the Orlydeo launch is not like your classic rare disease launch of the past. And I think it's a point John made earlier. This it's a and Jinkie was making in her comments. It's a crowded market And I may steal some of Jinky's thunder, but she said it.

Speaker 3

These patients are sticky. And so it's This is a slower moving but consistently moving launch. And then I think Jinkie maybe you Comment on again reiterate how we use the data. It really comes down to the insights and the data that we get from Jinky and her team.

Speaker 4

Yes. I mean, we triangulate, right, because it's imperfect in every way in terms of the rare disease market and data availability. So we take The market insights and the research that we do all the methods that I described in the remarks and basically model that out. And so Our physicians and our patients are telling us that the demand is they're still saying that they want more. And so The minute that changes, that landscape changes, we're all going to know about it, because we consistently cost it every quarter.

Speaker 4

And so that demand and the The Charlie are using in his model are our numbers, right? So essentially we're triangulating based on what the market is telling us And then marrying it to the actual ORILDEAO and that ramp within our sort of database of ORILDEAO patients to give us that confidence.

Speaker 3

And I'll come back to one other point, which is to address your question, Lisa, about are we are all patients going to cycle through. That ultimately is our goal, but if every patient cycles through Orlandeo, we'll come back and talk to you about how This has changed. It's more than $1,000,000,000 We don't need every patient to go through to get to $1,000,000,000 On a monthly basis, any given month, 5% to 10% of the patients with new start forms are actually Patients who dropped off at some point in the past and are coming back. So there is that component. But if we reach 4000, 5000 patients in the U.

Speaker 3

S, we will easily get to 2,000 Steady state, sticky patients by 2029.

Speaker 8

Okay, great. Thanks. And then just a question on the pediatric. How many pediatrics would be eligible

Speaker 7

For your calculation?

Speaker 3

So we think the number in the U. S. Market, the number of kids Could be in the 500 patient range, who could be eligible for prophylaxis. That doesn't mean 500 will be on Orlydeo or Any other prophy? But the pediatric side of the market is one that is still going to evolve Because it's only been in the last few years that PROFIs even been available, it's all injectable right now.

Speaker 3

And so we think that our views on that Could change, but we think of 500 patients is a pretty decent estimate right now.

Speaker 2

And Lisa, one other thing I'd add, it's hard to Quantified, but I think we've seen this with the adolescent population is this halo effect that happens in families. Remember, So, hereditary disease and what we see is when adolescents have done really well in a family, all of a sudden the mother or Father who has HAE is like, well, maybe I should try that. And I think the same thing is going to happen with pediatric patients.

Speaker 8

And then just a quick question on just on the expense side. It looks like you're kind of higher towards the end of this year in Q4 For your guidance, is that how we should sort of think of run rate going forward into next year? Maybe you could just provide some color on the kind of Expense trajectory into the 4th year and beyond. Thanks.

Speaker 5

Yes. We've given a revised range based on what we see. And so based on where we are and what we will share with everybody tomorrow at the R and D Day, We'll give some additional flavor specifically around R and D expenditure, but I think we're well positioned to see Growth in revenue, I think we will see some additional growth in that OpEx line, But we are always going to be very careful, very thoughtful around capital expenditure and making sure that the things that we invest Things that we think will create value. We will give some more additional details, Maher.

Speaker 2

Yes. I would add to that, That when you combine growing revenue with discipline around capital allocation, you're getting a lot closer To a situation where your cash needs to the company are self sufficient, right? And we're getting there. Tomorrow, we're really excited about what we're going to share with you. But another really important piece is having clear go no decisions and being disciplined about the bar we And when we continue to invest or when we stop and we've got a track record of that and we'll continue that.

Speaker 4

Thank you.

Speaker 2

Welcome.

Operator

The next question is from Serge Belanger of Needham and Company.

Speaker 11

Hi, good morning. Thanks for taking our questions and appreciate the additional detail on Orla Deo trends. I guess 2 for Charlie. We saw the percentage of patients on free product creep up late in the year last year. Just curious what you're seeing on that front.

Speaker 11

And then, I think earlier this year, there was an issue with The lack of funding for co payment support programs that led you to start the year on, I guess, the higher base of patients on free product. As we get closer to 2024, is that an issue that could replicate itself?

Speaker 3

Sure. Thanks, Serge. So first on the percentage creeping up at the end of last year, I think as I made a Couple of comments on an earlier question. It's reauthorization, not that sorry, not reauthorization reenrollment Season right now and so there are some patients who are switching around plans. Things did creep up a little in Q4.

Speaker 3

I don't know what will happen or Q3, I don't know what will happen in Q4, but it's not likely to get better. Yes, I point you to what I said earlier, which is this is a long multiyear game in terms of How we see this improvement in paid happening, but it's probably not going to get better in Q4, but we have confidence in the long term. As far as the co payment assistance in the Medicare from earlier in this year, That issue is still going on. It's been going on all year. We don't know what's going to happen next year.

Speaker 3

Also the IRA starts Kick in next year, so that's going to lead to some different dynamics. And so I would assume kind of Similar dynamics, but we don't know at this point. We'll just have to wait and see how the early part of next year plays out. It's outside of our control.

Speaker 2

Yes. I think the realistic way of looking at it is we're going to plan for a conservative case of there's going to be headwinds next year. So That's why we're saying don't expect a lot of progress on free to pay next year.

Speaker 11

Okay. And then on your path to 800 dollars 1,000,000 in U. S. Revenues in 2029, what assumptions do you make for the competitive landscape during that timeframe?

Speaker 2

I think let's have Jinkie answer this one because I think she's got the best insight into this and some of the comments she made are really important to Of course.

Speaker 4

Yes. So we talk about the modeling, right, and sort of how we do the research, the quantitative work with our base of patients and physicians. We share the profiles of this the competitive landscape, right? So for each competitor coming into the space, we present them with the opportunity to allocate patients to those to those competitors. And so what Charlie is using as sort of assumptions are all built off of those simulations, right, or the preference shares, Which then can push get pushed into the simulator.

Speaker 4

And the simulator then gives you a sense for where OIBDAO is going to land within the context of the competitors. So all the competitive like All the competitive dynamics are built into the assumptions.

Speaker 2

Yes. So just a couple of other things to stress That you might not have caught. She's assuming everybody succeeds, right, which is probably not going to happen, But we're being really conservative and we're saying everybody gets to the market. And the other thing that she emphasized was injectables are going to take from injectables, Right. And orals aren't going to take from Orla Deo because there's not an incremental benefit if you're controlled on a once a day therapy.

Speaker 2

It's not

Speaker 4

going to be meaningful enough. It's not worth the switch for them.

Speaker 2

Yes. So while we're factoring it in, the impact to Orla Deo is minimal.

Speaker 4

That's right.

Speaker 11

Thank you.

Speaker 2

You're welcome.

Operator

The next question is from Gena Wong with Barclays.

Speaker 12

Hi, good morning. This is Harshita on for Gena. Thank you for taking our questions.

Operator

I had a couple of

Speaker 12

quick ones on Orla Deo And then one on Factor D. I guess I'll ask the Factor D one first. Are you going to give an update tomorrow? If so, I'll defer the questions to tomorrow If not, I was wondering if you could give a quick update on that program today.

Speaker 2

David, for tomorrow.

Speaker 12

Okay, perfect. So on Arladeo, thank you for all the I think one metric you haven't talked about yet was the new prescription starts. How do you see the how was it in this Quarter versus in the future, is it still do you still expect 50% of new prescriptions from Tier 1? Just wanted some color on that.

Speaker 3

Yes. No, you're right. I did not talk about the physician source. It's really it's Consistent with what it's always been. So we're getting about half from the Tier 1 that covers about half the market and half from Everyone else.

Speaker 3

And our team has done a fantastic job of really reaching far doing a great job of moving The big prescribers and some of that it's hard work that is gradual progress as John Jenke and I have been describing. But then also seeking out patients in even a practice that might have one patient, they are there. And for a small team, they've covered a lot of ground and do it really efficiently.

Speaker 12

Perfect. Thank you, Thierry. That's really helpful. And the next quick clarification question is, in Jinkie's prepared remarks, I think you mentioned A comment on 25% of prescribers are going to prescribe Orla Deo. I can't remember what was the comment?

Speaker 12

I just wanted a quick clarification on that. And what was the sample size of the HAE docs?

Speaker 4

Yes. So that's the quarterly Measure of demand that we use. So we ask sort of what they're currently prescribing and then we ask future prescribing in the next 12 months and that's the 25%. And that's been Consistent way sorry, study over study, in that level of demand. So they are anticipating growth in their prescribing over the next

Speaker 2

Yes, let me just put a fine point on that. That's 25% of their patients will they'll prescribe Orlyvia. That's correct. Yes, not 25% of the docs. And then the sample size,

Speaker 4

Yes. The sample size for the quarterly pulses are 65 allergy and immunologists. In our larger Which we do once a year, there are what I said, 175 HCPs.

Speaker 12

Perfect. Thank you so much. Very helpful.

Speaker 4

Yes.

Operator

The next question is from Jacqueline Lu of Oppenheimer. Please go ahead.

Speaker 6

Hi, this is Jacqueline on Justice team. Could you provide a little bit more insights for tomorrow's Could you comment on the complement therapeutics in the landscape, where the unmet need exists for M1,000,000,000 and particularly as data in iGen continues to grow with Factor B and C5 Envision inhibitors.

Speaker 2

Yes. I'm not going to get into the detail today. All I'm going to tell you is don't miss it. This is going to be different from other R and D days that you And you're going to get insights into our pipeline and how we discover drugs that I think is worth paying attention.

Speaker 3

It's a lot more than 1,030. Yes.

Operator

Okay. Thank you. This concludes our question and answer session. I would like to turn the conference back over to John Stonehouse for any closing remarks.

Speaker 2

Yes, thank you. So today was all Or Ladeo, and our goal was to give you better insight into what we see both today in the marketplace and the trends that we see in the growth And then also how we see the market shaping up in the future. So hopefully, you found that very helpful. Tomorrow is all about the pipeline. And as Charlie said, it's about How we're expanding the pipeline and also how we're discovering 1st in class and best in class molecules And then how we'll be very careful and have clear go, no go decisions around capital allocation.

Speaker 2

So Please tune in. We're really looking forward. We appreciate those of you that are making the track here to Birmingham, Alabama and look forward to talking to you tomorrow.

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Earnings Conference Call
BioCryst Pharmaceuticals Q3 2023
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