BioCryst Pharmaceuticals Q4 2023 Earnings Call Transcript

Quartr
Provided by Quartr
February 26, 2024

There are 12 speakers on the call.

Operator

Good day, and welcome to the BioCryst 4th 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 Please note this event is being recorded. I would now like to turn the conference over to John Bluth at BioCryst. Please go ahead.

Speaker 1

Thank you very much. Good morning, and welcome to BioCryst's 4th quarter year end 2023 corporate update and financial results conference call. Today's press release and accompanying slides are available on our website. Participating with me today are CEO, John Stonehouse CFO, Anthony Doyle Chief Commercial Officer, Charlie Guyer and Chief Medical Officer, Doctor. Ryan Arnold.

Speaker 1

Following our remarks, we'll answer your questions. Before we begin, please note that today's conference call will contain forward looking statements, including those statements regarding future results unaudited and forward looking financial information as well as the company's future performance and or achievements. These statements are subject to known and unknown risks and uncertainties, which may cause our actual results, performance or achievements be materially different from any future results or performance expressed or implied in this presentation. You should not place undue reliance on these forward looking statements. For additional information, including a detailed discussion of our risk factors, please refer to the company's documents filed with the Securities and Exchange Commission, which can be accessed on our website.

Speaker 1

In addition, today's conference call includes non GAAP pro form a financial measures. For a reconciliation of these non GAAP measures against the most directly comparable GAAP financial measure, please refer to the earnings press release posted in the Press Releases section of our Investor Relations website atbiocrys.com. Now, I'd like to turn the call over to John Stonehouse. Thanks, John. 2023 was another impressive year for Orlodeo starting with generating $326,000,000 in revenue in just the 3rd year of launch.

Speaker 1

We continue to make great progress toward our goal of global peak revenue of $1,000,000,000 Let me explain why. Late last year, we laid out a set of assumptions that would lead us to $800,000,000 in peak sales in the U. S. The first assumption was to exit last year with a base of approximately 10.50 patients on therapy. We actually exited the year with a base of over 1100 patients on therapy.

Speaker 1

2nd, we added over 300 net new patients well above the average of 200 per year we need. 3rd, we improved the percentage of paid therapy in the commercially insured part of the business from 7% to 79%. And 4th, we made a modest net annual price increase in the U. S. In all four of these assumptions, Charlie's executed such that we met or exceeded each of these goals.

Speaker 1

That's great execution and real progress towards our goal. Today, we'll focus our prepared remarks on Orla Deo and the financials. We'll start with Ryan, who will cover the data presented at AAAAI this past weekend and how many patients on Orla Deo are seeing excellent control of their HAE along with the convenience of once daily dosing. With that, I'll pass it over to Ryan. Thanks, John.

Speaker 1

I've had the privilege during my career to work on several therapies that help change the lives of patients who live with chronic life altering diseases. An important lesson I've learned is that long term data and particularly evidence from real world experience, especially in rare disease, critical to understanding how a treatment can address unmet needs and change the lives of differing patient populations. This is an exciting time for Orlodeo because after 3 full years on the market, we are seeing a very consistent picture emerge from the building evidence. Realtor experience and the long term clinical data are telling a very consistent story on how Orlydeo can provide meaningful benefits to a variety of HAE patients. We recently published the final analysis of data from the open label long term extension portion of the APeX-two study of baritrolstat.

Speaker 1

The patients who started on blinded veritrolstat 150 milligrams and completed the full 2 years of the study had an average reduction of 90.8% in HAE tax compared to their baseline rates. But most don't measure their tax in percentages. What's most meaningful to people living with HAE is that they get the chance to live a normal life by minimizing their attack burden and experience meaningful improvements in their everyday quality of life, all while avoiding the unnecessary potential burdens of treatment. Orlandeo treated patients in this long term study reported rapid and sustained improvements from baseline of 3.3 attacks per month to 0.3 attacks per month after 2 years, with the median attack rate of 0 at month 24. These patients also reported meaningful long term improvements in quality of life, treatment satisfaction and an overall safety profile that is very reassuring for people living with this lifelong disease.

Speaker 1

That kind of change and the sustained low rate of attacks with just one pill once a day is transformative for many patients. These long term data from our clinical program tell an important part of the story, which is being consistently reinforced by our expanding base of real world evidence. This past weekend at the AAAAI meeting in Washington, D. C, we presented 5 posters showing strong real world evidence patients with HAE. What patients are experiencing in the real world is consistent with the 2 year clinical data.

Speaker 1

Patients with Type 1 or 2 HAE are reporting long term median attack rates of around half an attack per month after switching from other prophylactic therapies. By their own account, these patients are having fewer attacks on Orlandale than on their prior therapies. Patients report rapid and sustained reduction in attacks or maintaining attack free status regardless of whether their baseline monthly attack rate was very high or very low prior to starting on Orlodeo. These data on effect regardless of baseline attack rate are consistent with evidence we have presented from our clinical trials. Patients diagnosed by their physicians as having HAE with normal C1 inhibitor levels also are reporting rapid and sustained reductions in attacks on oral Lideo.

Speaker 1

And we are seeing similar outcomes outside of the United States, particularly in countries like France, where patients can be followed in comprehensive programs with the active involvement of health care providers. This real world evidence demonstrating the long term safety and effectiveness of Orla Deo is exciting. Our team has been hearing the stories of Orlodeo over the past 3 years and these data further illustrate why it is such a favorable treatment option for people living with HAE. What is even more exciting is that the data we presented at AAAAI are just the start. We will continue to generate more real evidence with Orlodale over the coming years.

Speaker 1

We look forward to showing again and again how this treatment can help change the lives of patients and families impacted by HAE. I'll now turn it over to Charlie to describe how this emerging evidence is translating to our commercial efforts.

Speaker 2

Thanks, Ryan. As John noted earlier, we recently described how consistent net patient growth of 200 per year for the next several years puts us on track for $800,000,000 in sales in the United States. Entering our 4th year on the market, we are very much on track because we added 321 Orlydayo patients in the U. S. In 2023.

Speaker 2

The real world evidence that Ryan described helps explain this growth. Patients would like convenience. There's no doubt about that. But what they demand is efficacy, control of their attacks. The real world data with Orlydeo clearly demonstrate that patients can have both efficacy and convenience, no trade offs.

Speaker 2

Our teams have done a very good job of launching Orlodeo, but in the end, patient experience will dictate how far we go. Ryan shared that after switching to Orlydeo from other prophylaxis therapies, patients experienced a median rate of about half an attack per month. What that means for patients is that many or most months are attack free and attacks that need to be treated are often less severe. Half an attack per month is also an important benchmark. We do market research with large samples of HAE patients and we've reported previously at a medical Congress that half an attack per month matches the level of attack control reported by patients taking injectable prophylaxis therapies in the real world.

Speaker 2

This low and consistent rate of attacks in Orlydayo meets patients' product. For many patients to be able to get that level of control with an oral once daily therapy is transforming how they live with HAE. We recently conducted an anonymous market research project with a sizable cohort of patients who have experience with Orlydeo and ask them as part of an exercise to write a letter to Orlydeo describing that experience. Themes such as you gave me confidence, you changed my life and I feel like a normal person again were common. The strong evidence from patients also continues to shape prescriber expectations and give them confidence.

Speaker 2

Our large quarterly surveys of allergists in 2023 showed they consistently expected to grow the proportion of their HAE patients treated with Orlydeo by about 30% over the next 12 months. As we noted in our press release today, the number of patients on paid therapy or our long term free product program also grew by 30% in 2023, tracking with physician predictions. Currently, about 50% of patients on Orlideo have switched from mother prophylaxis, but the allergists in our 2023 surveys expect about 2 thirds of Orlydeo growth over the next year to come from switches from injectable prophylaxis. By the end of 2023, Orlydeo had been prescribed over 2,500 times in the United States. That means that at least 5,000 diagnosed and treated patients have not yet tried Orlydayo.

Speaker 2

Over 1,000 U. S. Healthcare providers have now prescribed Orlydayo, including over 200 new prescribers in 2023, but clearly there is an opportunity for HAE treaters for many more of their patients, just as our market research predicts. We have way more opportunity in front of us than behind us and the growing body of evidence about how Orlodeo is changing patients' lives is going to help us get there. I'll pass it to Anthony to describe our financial performance.

Speaker 2

Thanks, Charlie.

Speaker 3

It was great to see such a strong Q4 and full year 2023 for Orla Deo, not just the revenue performance, but the continued underlying strength in net new patient adds, giving us confidence of achieving between $380,000,000 $800,000,000 in global Orla Deo revenue this year on our path to peak sales of $1,000,000,000 You can find our detailed 4th quarter financials in today's earnings press release, and I'll call your attention to a few items. Total revenue for the quarter came in at $93,400,000 $90,900,000 of which came from Orla Deo and Ladeo net sales for full year 2023 at $326,000,000 an increase of $74,000,000 or 30 percent year over year. Of the $90,900,000 of global Oladea revenue, $79,400,000 came from U. S. Sales with the remaining 11.5% or 12.7% coming from ex U.

Speaker 3

S. On a full year basis, U. S. Oralideo sales contributed $288,400,000 of the $326,000,000 global total, with the remaining 37.6 percent or 11.5 percent coming from ex U. S.

Speaker 3

Operating expenses, not including noncash .com for the quarter were approximately $119,600,000 Included in this are significant one time expenses. These include about $5,400,000 attributable to the R and D reorganization, including costs related to the reduction in force and the postponement of the expansion of the Discovery Center in Birmingham, Alabama the $5,000,000 upfront payment we made to Clearside related to our OFA partnership as well as around $7,000,000 in CMC and other trial costs related to our partnership decision for BCX1013, all of which explain the increase in OpEx from Q3 of 2023. Operating expenses, not including noncash .com for the full year, came in at $379,500,000 which, when excluding the 5 point $4,000,000 of restructuring one time adjustments I mentioned, landed it within our guidance range. We expect that quarterly expenses in 2024 will normalize in the low to mid-ninety million dollars range, taking us in line with our full year 2024 guidance of between 3 $65,000,000 $375,000,000 and essentially flat to 2023. Cash at the end of the year was at $390,800,000 and net cash utilization for the quarter was $8,400,000 In January, we provided guidance on our near term timeline to achieve profitability.

Speaker 3

For 2024, we expect that revenue will exceed OpEx, not including noncash.com, and this will result in us generating an operating profit this year. Additionally, with revenue exceeding $350,000,000 it puts us into a tier whereby the incremental revenue will be more profitable as the blended royalty rate is reduced. In the second half of twenty twenty five, we expect to be approaching net income and cash flow positivity on a quarterly basis. And then in 2026, we expect to achieve net income and cash flow positivity on a full year basis. Achieving independence from the capital markets, while we also continue to invest in further expanding our global reach for Orla Deo and expanding our label with the pediatric indication, while also further advancing our exciting early stage pipeline puts the company in a very strong position moving forward.

Speaker 3

Operator, we'll now open it up for Q and A.

Operator

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

Speaker 4

Hi, guys. Good morning. Thanks for taking my questions. Can you give us a little bit of color regarding the patients that you were able to add last year? They came as you said higher than what you do you have a sense of what level of patients that was added, that you weren't expecting?

Speaker 4

And in general, do you have a sense of what level of baseline attacks patients have when they are switching in particular to your drug from another drug? And then I have a follow-up. Thanks.

Speaker 2

Sure. Tazeen, there wasn't really a profile that we weren't expecting. We were since the beginning of launch, we've been getting patients from all different profiles as Ryan laid out with some of the data. Sorry. Some of the data that we presented this weekend at AAAAI, regardless of baseline attack rate, regardless of background therapy, patients do really well on Orlydeo.

Speaker 5

And if I can

Speaker 1

You want to take the rest of that, Ryan? Yes. Is there any phenotype? I think what she's asking is, is there baseline attack rate? Is there any phenotype that we're seeing?

Speaker 1

Any particular group that's going into switching to Orla Deo? Yes. And I'll call your attention to Slide 6 and Slide 8 in our deck. Both of these speak to the background or baseline attack rates. And what you'll see here is despite varying attack rates, be it high or low, patients do very well in Orlodeo.

Speaker 1

Slide 8 achieving an attack rate of 0.5 at day 540. So they had a rapid and sustained reduction in their attack rates. So basically, a variety of patients can benefit from Orlodeo regardless of what their baseline attack rate is. Yes, so tazine, you really can't predict it. So the goal is to get everybody to try it and see if it works for them.

Speaker 6

Okay. Yes. I was more asking about

Speaker 4

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

Speaker 1

So Charlie is alive back there. I think I

Speaker 2

can talk again. My asthma attack. The discontinuation has been really steady in 2023 in the last few years. So still, when a patient starts Orlydaya, we get 60% of those patients to 12 months and then very few discontinuations after that. And I think relating to your earlier questions too, we see the same retention rate regardless of patients' background.

Speaker 2

So regardless of their attack rate, regardless on whether they're switching from prophylaxis or coming in from acute only, they're all staying on at about that same rate, 60% a year.

Speaker 7

Okay. Thank you.

Operator

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

Speaker 8

Hey, good morning guys. Thanks for taking my question. Congrats on the continued progress. I'm curious if you could talk a little bit about the I guess your sales and marketing strategy this year relative to last year. Do you expect, I guess, continued pull through from some of the team territory changes that were implemented in 2023?

Speaker 8

In 2024, what's going to what do you expect to be the focus of the additional SG and A investment for this year? And are there any changes to your commercial approach or strategy with an expected greater proportion of the opportunity now coming from the switchers versus those patients who are on demand only?

Speaker 1

Charlie, you want to take that?

Speaker 2

Yes. Hey, Brian. So one of the reasons I do think we did so well last year is we did make those adjustments to the team in the beginning of 2023. By the end of last year, the additional sales folks, the additional patient services, market access that we added, everyone was active and really comfortable in their roles and working well together. And I think that, that is a big part of our performance.

Speaker 2

And then going forward to your question about any changes in the kind of data that again that Ryan presented, I think is really critical and we're very focused on getting patients and physicians comfortable with the switching from an injectable prophylaxis to Orlydeo is opportunity for patients to really benefit. And I think we're seeing that our customers are starting to understand that. So we'll focus on that messaging. And Brian, one thing I'd

Speaker 8

add Got it. Thank you.

Speaker 1

One thing I'd add Brian is that Charlie mentioned was this increasing comps. And one of the things that we're seeing at QuadAI and other place, we had standing room only session at QuadAI and the confidence in the docs is really high. You compare that to a year ago where people were still kind of on the fence and it's really because they've had experience and they're seeing it work extremely well in patients. So that'll have an effect on that will be really positive for Orlydeo and for patients.

Speaker 8

Got it. Thanks, John. And maybe just a quick follow-up. It sounds like you've got some visibility to getting to the goal of a paid rate of 85% by the end of the decade. Where do you think you can get the paid rate this year relative to 2023?

Speaker 8

What's embedded in your guidance? And how much potential upside could there be versus your guidance if things go better than expected on that front? And I'll hop back in the queue. Thanks.

Speaker 2

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

Speaker 8

Got it. Thanks, Charlie. Thanks again.

Operator

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

Speaker 4

Hey, guys. Good morning. Thanks for taking my question.

Speaker 6

Can you just talk about the extent to which your near and long term top line expectations for Orla DEO reflect the introduction of less frequently dosed injectables and other orals? Thank you.

Speaker 2

Yes. Hi, Jeff. We take into account all the introductions of new products, including new injectables new orals. And what we what Jinkie Roselli and I described at the last earnings call is that patients once they're on a therapy and doing well tend to be really sticky on that therapy. And when patients are doing as well as they are on Orlydeo, we don't see them moving to other therapies.

Speaker 2

The other key part of it is that we have a very differentiated product in a once daily oral and that's something that patients and health care providers really want. And so a new injectable therapy offers some incremental benefits, but it is not highly differentiated, the way Orlydeo is.

Speaker 1

Yes. I think, just flip the question around and ask why would they go on to another product? What's the incremental benefit? And I think what Charlie presented today and what Ryan presented is patients aren't sacrificing efficacy for convenience. This drug works spectacularly well in certain patients and it's a once a day drug.

Speaker 1

So what incremental benefit is going to cause them to switch and we've seen we're getting switches, you have to have some incremental benefits. So the question is, it can't be efficacy, right? Because if you're controlled on our drug, then you can't do any better.

Speaker 5

Thank you.

Speaker 1

You're welcome.

Operator

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

Speaker 6

Hi. Just a follow-up on that. I mean, you do have a half a an attack rate per month, right, which is 1 every 2 months, which is 6 per year after switching from other prophylaxis. So would that not be like those types of patients, would they not be interested in maybe trying something else? That would just be my one question, but I actually have other questions beyond that.

Speaker 1

Brian, do you want to tackle that one? I mean, the bottom line is nobody does better than that. That's kind of the standard. Every drug has breakthrough attacks. And in that number is mixture of people that aren't having attacks and some that are.

Speaker 1

And so but Ryan, I don't know if there's anything else to add. Yes. As John alluded to, I mean, this is you've seen similar attack control with other injectable therapies. And we view this not as a trade off, but a trade off because again, patients don't want just attack control. They want the added conveniences as the quality of life improvements.

Speaker 1

And again, we've reported all of both in our clinical studies as well as in the real world evidence. So a half attack per month is doing very well. And again, that doesn't include the tax severity, which for some they've shared these are very manageable. So again, this is a very notable improvement and looks very similar to injectables in terms of attack rate control. Yes.

Speaker 1

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

Speaker 6

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

Speaker 1

Yes. No, that's a really good question because we're super paranoid. And one of the things I asked Jinky is what's the tipping point on frequency of injectable dosing that would make it as attractive as it once daily oral found it yet. We I mean, we run that research. We haven't found it yet.

Speaker 1

And so we'll keep looking. Okay. Sorry to interrupt. I would just add, I think people underestimate fear of injections that patients experience. And while it can be convenient for some, I think that fear and fatigue of injections can be underestimated.

Speaker 1

So and we hear that continuously from our physicians and from patients as well. So they are seeking convenience as well as that aspect of normal having a normal and carrying around a once a day oral feels very normal for a lot of patients.

Speaker 6

Okay, great. And then just quick question for me. Can you kind of go through the math of like how many patients you've treated so far? How many patients like HAE patients are out there and how many more need to try Orladel, given the kind of like stickiness of the product, like maybe whatever half the patients or so end up like sticking to it long term. Is that kind of like go through from here to get to that $800,000,000 number?

Speaker 1

So start with the $7,500,000 and

Speaker 2

work backwards. Yes. Lisa, the as near the end of my remarks today, I pointed out that there are at least 5,000 patients who have not yet tried ORILIDEAO. That's based on our previous estimates that there are about 7,500 diagnosed and treated patients. We've had 2,500 prescriptions to date.

Speaker 2

So there's at least another 1,000 patients. And with what we're hearing from physicians and patients, we expect a lot more trials in that 5,000. So plenty of room to grow.

Speaker 6

Okay. And what like as you think about what you need to get to that $800,000,000 number, how is it like half of those that need to try it or what is the amount?

Speaker 2

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

Speaker 6

Great. Thank you so much guys.

Speaker 1

You're welcome.

Operator

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

Speaker 7

Thanks for taking our questions. So first question is around kind of potential implications with the change in the Medicare Part D redesign into IRA. So could there be any potential impact to patient volumes with the decrease in the max out of pocket spend? And what would be the timing of something like this? So that's one.

Speaker 7

And then just a follow-up to some of the questions that have been asked. Can you just further characterize your commentary around the clinicians that are prescribing? They're more academic, more community? Is it really still just that 50% split now? Thanks so much.

Speaker 2

Thanks, Stacy. So on the IRA, particularly next year when the max out of pocket shifts to $2,000 we think that will be an advantage for patients in terms of affordability. And very important is the next year that $2,000 can be paid over the course of the year in the 12 month increments. And so we think that that will increase affordability and likely increase the rate for Orlanda. I don't think it will really change the volume of patients treated.

Speaker 2

It's just going to affect the rate. And then as far as clinicians, we see a great mix. Again, we see the academic physicians as well as a lot of community physicians. As I said, over 1,000 health care providers have prescribed so far, and that is really distributed very evenly across the deciles of our healthcare provider potential index. And it's been very consistent that way every quarter.

Speaker 2

So we're getting both academic and community.

Speaker 7

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

Speaker 2

Yes. We do. Yes, we do, next year in 2025 and beyond.

Speaker 7

Okay, wonderful. Thank you.

Speaker 1

Thanks.

Operator

The next question comes from Sergey Belanger with Needham and Co. Please go ahead.

Speaker 9

Hi, good morning. Thanks for taking my questions. I guess the first one for Charlie. Can you just give a little color on the 1Q seasonality this year? Is it similar to prior years?

Speaker 9

And then second question, I guess, for John and maybe the rest of the team. I think you've all been consistent that you do expect competition from an oral prophylactic by the end of the decade. Just curious your thoughts on an oral on demand treatment and what impact that could have for the market? Thanks.

Speaker 2

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

Speaker 1

And with regard to oral competition, specifically on demand therapy, I mean, we certainly can't argue that orals are important. And if you have an oral alternative for a breakthrough attack, we think that's great. And so having that as a choice for patients, we think is just another benefit. And in all, oral option would be fantastic, right? A prophy and when you have a breakthrough attack, take an oral on demand.

Speaker 9

Okay. Thanks.

Speaker 1

You're welcome.

Operator

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

Speaker 5

Thank you for taking my questions. I just have one regarding the data report. I think if we look at the Slide 6, 7, 8, when we look at number of patients more than 2 third of patients I mean the beginning of a patient number and the end of a patient numbers, it was about 1 third of patients continue until the end of data report. So any color you could give regarding the other 2 third of the patient?

Speaker 1

Yes. And these well, maybe I'll let you start, Ryan. Yes. I mean, thanks for the question. These are patients that are they're reporting self reporting their attack rates.

Speaker 1

So and because this is real world data, there's always limitations in terms of how that is recorded. In some months, patients may not share what their attack rates are. And so but that doesn't mean they've necessarily come off of therapy. And all of these patients have that you've seen in these slides have completed 540 days of therapy. We're still waiting for some to complete that same time frame to include them in analysis.

Speaker 1

Yes. To keep somebody in a study for 2 years is challenging, certainly. And remember, some patients don't do well in our drug. We've got about a 60% retention. And so it's not uncommon to see people not succeed and you see that in some of these results.

Speaker 2

Just to underline what Ryan said, just to make sure it's really clear. In those in this real world evidence, we measure patients based on the length of time that they've therapy and some of them just haven't had the opportunity to reach 5 40 days because they started at a later time point. So it's a dynamic sample. Of course, some patients do drop out, but this represents how well patients when they're doing well on Orlandaio, they're doing really well and sticking on therapy.

Speaker 1

That's the point, Gina, is that the patients that do well, do really well in drug.

Speaker 5

Okay, great. Thank you.

Operator

The next question comes from Francois Brisebois with Oppenheimer.

Speaker 10

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

Speaker 2

Thanks, Francois. The discontinuation rate, there are 2 main reasons for discontinuation and these won't be surprising. The number one reason is perceived lack of efficacy. So as we've said, no drug is perfect and no one HAE therapy is for everybody. And so that's the number one reason reported.

Speaker 2

The number 2 reason is, adverse events, specifically gastrointestinal, gastrointestinal, which is not surprising given the product label and our clinical trial experience. What we do know is that, some patients give up too early. And so part of our messaging is for physicians and others to set expectations that the you can have a breakthrough attack, you might have GI events. The GI events tend to go away, after a few weeks of therapy for most patients. And so it's important that patients don't give up too early.

Speaker 2

We actually see, in 2023, about 10% of the patients starting oral ODAO were actually restarts. They're people who gave up in the past and came back because they knew that they'd given up too early.

Speaker 1

And Francois, John can send you the slide, but, one of the slides we've had in previous decks shows the pattern of discontinuations over 2 years and it's flat. And so I think now we have a pretty good idea of what that pattern is. And if we've got you for out to a year, we've got you.

Speaker 10

Understood. And then can you just help me understand a little bit the U. S. Versus ex U. S.

Speaker 10

Dynamics in terms of the growth and your assumptions and expectations? Are there challenges maybe ex U. S. That aren't happening in the U. S?

Speaker 10

Just any color there would be helpful.

Speaker 2

Thank you. Sure. Ex U. S, first of all, once we the biggest challenge or the biggest time factor is getting market access in an ex U. S.

Speaker 2

Market. And so that always takes longer and we have countries that rolling on all the time. So a number of countries in Europe, for example, like Germany, UK and France, we got market access a few years ago, but we're just now getting market access in others like Spain and Italy. And so that's one factor. Pricing is a lot lower ex U.

Speaker 2

S. So it takes 4 to 5 ex U. S. Patients to add up to 1 U. S.

Speaker 2

Patient. So our strategy is very much a volume strategy outside the U. S. And then finally, what we're seeing in the real world in these countries where we have market access and we've launched is the same consistent pattern of patient adds depending on the market, the HTA market dynamics. Sometimes that's patients switching from other prophys, sometimes there's growing the prophylaxis market with a drug like Orlydeo.

Speaker 2

At peak, we expect ex U. S. To equal about $200,000,000 of the $1,000,000,000 in sales and what we see so far gives us confidence

Speaker 1

that we'll get there. And if TECCYRO is an analog here, right at the time that the U. S. Starts to flatten out, the ex U. S.

Speaker 1

Continues to grow. So you have overall growth of the brand still. So that's what we're expecting right now.

Speaker 10

Understood. Thank you very much.

Speaker 1

You're welcome.

Operator

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

Speaker 11

Hi, good morning and thanks for taking my questions. I just wanted to ask a clarifying question on the seasonality this quarter. Is that for the same reason as in Q1 2023 where there were budget issues with external charities, which increased the number of patients on free drug program or what are you seeing this year so far?

Speaker 2

Sure, Maury. That's one of the situations, the Medicare issue. We've got a little bit of insight into that. What I'd say is, it's not solved yet. It doesn't seem to be worse than last year, but it's not solved.

Speaker 2

We think next year, as I said earlier, with the IRA rolling in fully, we have expectations that, that budget issue will be more solved in 2025. The main reason for the dip in Q1 is the broader percentage of patients getting reauthorizations. And when that happens, we have to drop many patients back temporarily to free product. And then also in the 1st quarters, it's the highest hit to gross to net because in the commercial market, we're

Speaker 1

helping pick up patient co pays and the majority of that happens in the Q1. And you'll see a corresponding nice pop in the second quarter when we get those people back to pay.

Speaker 11

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

Speaker 2

The 3.21 was the net growth across the whole year. So, what we did say is that we ended the year with 1,004 patients on either paid therapy or long term, free product. There was also a sizable chunk of patients on short term quick start, new patients coming in. And it usually takes us we get the product out very quickly. For most patients, we get them to either paid or, from free product within about a month.

Speaker 11

Got it. Okay. Thanks for taking my questions.

Speaker 1

Welcome.

Operator

Your final question today comes from John Wallenby with Citi. Please go ahead. Hi, this is Catherine on for John. I just have a question about how you're thinking about profitability versus

Speaker 2

your earlier pipeline kind of prioritizing those? And then just a

Speaker 5

Thanks.

Speaker 3

Yes. I think we've been very clear about our path to profitability, very excited to get to the point where we are independent of capital markets. We've been seeing over the past years that convergence of the lines between revenue and OpEx. We continue to see it this year and beyond. So being able to generate an operating profit this year, getting towards both cash positivity and EPS at the end of next year and then achieving it in 2026, I think is puts us in a right spot.

Speaker 3

We do that at the same time as continuing to invest in that early phase pipeline. So the two things coexist and actually the opportunity to be able to invest in whatever we can do to move as fast as we can in those periods because that early phase pipeline that we generated in or that we announced in November is in fact early phase, puts us in a spot where the expenditure within the next kind of 3 years is not as meaningful as it would be when you get them to pivotal trials. So I think the company is in a great spot and if there's anything we can do to accelerate, we absolutely will.

Speaker 1

And there's nothing to update on 1,013. Nothing's changed on the timeline.

Operator

Thank you.

Speaker 10

Welcome.

Operator

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

Speaker 1

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

Speaker 1

So have a great day and thanks for your interest in BioCryst.

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Earnings Conference Call
BioCryst Pharmaceuticals Q4 2023
00:00 / 00:00