BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX) Q1 2024 Earnings Call Transcript May 6, 2024
BioCryst Pharmaceuticals, Inc. misses on earnings expectations. Reported EPS is $-0.31 EPS, expectations were $-0.23. BCRX isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good morning, and welcome to the BioCryst First Quarter 2024 Earnings Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to John Bluth at BioCryst. Please go ahead.
John Bluth: Thanks, Drew. Good morning, and welcome to BioCryst’s first quarter 2024 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.
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 www.biocryst.com. I’d now like to turn the call over to Jon Stonehouse.
Jon Stonehouse: Thanks, John. We are off to a fantastic start to the year with growing ORLADEYO revenue and our pipeline advancing on schedule. ORLADEYO revenue in Q1 exceeded our expectations as the commercial team in the US did a great job successfully navigating the reauthorization process faster than previous years. Charlie will share more detail, but now in the fourth year since approval, the steady and consistent growth of new patients shows no signs of letting up and we are even more confident we are on track to reach our goal of $1 billion in global revenue at peak. We continue to make great progress with our prioritized pipeline, too. Our ORLADEYO pediatric program is on schedule to file for approval next year. We continue to make progress with BCX10013 and expect we will be able to decide on whether to partner or discontinue the program later this year.
In addition, our other pipeline programs, including BCX17725 for Nethertons and avoralstat for DME are advancing toward the clinic with first or best-in-class profiles. Over the next 12 months, ORLADEYO will be approaching the midway point of our global peak revenue goal. We’ll be preparing to file for approval for ORLADEYO use in pediatric patients and we’ll be starting to move multiple pipeline programs into patient studies. And last but not least, we will be approaching profitability. The year is off to a strong start with exceptional progress in all of these areas, and we are focused on continuing this momentum throughout the year. With that, I’ll turn it over to Charlie to share the outstanding performance of ORLADEYO for the quarter.
Charlie Gayer: Thanks, Jon. During the quarter, we continued to execute our [global] (ph) plan for ORLADEYO very effectively. Revenue of $88.9 million exceeded our expectations because of the efficient handling of prescription reauthorizations in the United States, combined with the continued strong demand as healthcare providers gain confidence in ORLADEYO. Based on these improvements and trends, we are raising our 2024 ORLADEYO revenue guidance to the top half of our prior range and now forecast $390 million to $400 million for the year. I’ll describe these improvements and trends more specifically. Last year, we invested in our patient services and market access teams with the goal of improving efficiency and effectiveness of patients to paid therapy.
The first quarter shows that these investments are working. Two facts stand out in this improvement. First, our patient services team completed more benefits investigations in January than we did in the entire first quarter of 2023, resulting in patients getting back to paid therapy quicker than in previous years. Completing these investigations early in the first quarter gives our better understanding of the ease or difficulty of the reauthorization process. If it’s easy, we get to paid shipments quickly. If it’s going to be difficult, the team can act faster with better information to solve any issues. And second, even though we still provided temporary free product for many patients during the first quarter reauthorizations, the faster actions in the quarter meant that paid shipments were within 1% of fourth quarter 2023 paid shipments.
This was above our expectations. As for customer demand, we had another very strong quarter for new patient prescriptions. In fact, the last two quarters have been the best consecutive quarters for demand since the six months of the launch in 2021. Patients and healthcare providers continue to understand and gain confidence that they can get great efficacy and [Technical Difficulty] with ORLADEYO, all with just one capsule once a day to prevent HAE attacks. We also continued to strengthen the brand by presenting new evidence showing the real-world impact of ORLADEYO. At AAAAI in February, we showed how well ORLADEYO is controlling HAE attacks, regardless of prior therapies or baseline attack rates. Patients switching to ORLADEYO from other HAE prophylaxis therapies, for example, maintain and even improve long-term attack control, reaching a median rate of half an attack per month.
Patients attack-free at baseline remained attack-free on ORLADEYO. Later this week, we will present new data at the ISPOR conference in Atlanta, demonstrating that patients initiating ORLADEYO experienced significant reductions in overall healthcare resource utilization, a finding that will be very meaningful to payers. We are well positioned to provide frequent health economics — health outcomes and economics updates with large and growing cohorts that already include hundreds of patients. These new data will further support the growth in customer demand for ORLADEYO for many years to come. The increasing customer confidence that we’re seeing in the US is also happening in the rest of the world. Patient growth in Europe was strong and consistent in the first quarter and recent launches in Spain and Italy are already adding to this trend.
Finally, our BioCryst Japan team is now fully in place from the start of 2024, and we are encouraged by the early signs of their impact. The overall trends in real-world evidence, customer confidence and patient growth continue to point to $800 million in peak U.S. revenue with sustained peak global revenue of $1 billion. I’ll now hand over to Helen to provide an update on our pipeline.
Helen Thackray: Thanks, Charlie. Our research and development teams are busier than ever as we are rapidly approaching our next major pipeline milestones, which include advancing multiple programs into the clinic starting later this year and filing for pediatric approval with ORLADEYO. Let’s start there. I’m pleased to share that we’ve completed enrollment in the pediatric trial with ORLADEYO, which includes extending dosing in children down to two years of age. This means we are on track to submit for pediatric registration as planned in 2025. It also means we are even closer to providing the first oral prophylactic therapy to children with HAE. It’s been remarkable how quickly our pediatric has enrolled. We believe this reflects the demand for an oral therapy as prophylaxis of HAE attacks in children.
It has the potential for this to be a transformative option for both children and their parents, a pediatric formulation made of granules that can be sprinkled on soft foods or taken with a glass of water. We are excited to be so close to achieving this goal of bringing ORLADEYO to children under 12, and we look forward to submitting for registration next year. Turning to our next clinical program, our Factor D inhibitor, BCX10013, we continue to progress the ongoing proof-of-concept trial, and we expect to either partner or discontinue the program later this year as planned. Up next, we have two pipeline programs that will enter the clinic within 18 months. These are BCX17725 for Netherton syndrome and avoralstat for diabetic macular edema or DME.
We are on track to begin a clinical trial with BCX17725 by the end of this year. This is a fusion protein with very high potency inhibition for KLK5 and has the potential to be a best-in-class product, providing disease-altering treatment for people with Netherton syndrome. Netherton syndrome is a rare, lifelong genetic disorder that often presents an infancy with red, scaly and inflamed skin. Patients require chronic care to protect the skin and monitor for lifelong susceptibility to inflammatory and atopic conditions. Netherton syndrome can be life-threatening, especially during infancy when neonates are vulnerable to dehydration and recurrent infections. Currently, there is no approved treatment for Netherton syndrome, and it’s our goal to deliver a targeted therapy for these patients.
Next into the clinic will be avoralstat, our plasma kallikrein inhibitor in development for the treatment of diabetic macular edema or DME, which is on track to initiate a trial in patients next year. Our goal here is to improve vision in patients with persistent DME despite the use of VEGF inhibitors. At least a third of patients with DME have continuing symptoms and even worsening vision loss when treated with VEGF inhibitors, which may be because plasma kallikrein is a contributing cause of disease. The need for additional therapeutic options is real. We’re working with Clearside to deliver avoralstat to the suprachoroidal space in the eye in order to achieve sufficient exposure in the right location to interrupt the pathophysiology of DME in the retina and stop swelling in the back of the eye.
Based on the preclinical and safety data we accumulated with avoralstat when we studied it in the HAE program, we are in a position to move quickly into patients with DME with our first clinical trial next year, so we can evaluate for proof of concept directly in patients. Right behind these two programs, our discovery programs for targets across the complement system are also advancing. The three programs underway include our protein therapeutic complement inhibitor targeting all three pathways, the classical, lectin and alternative pathways complement and our oral C5 and oral C2 inhibitor small molecules. We are on track to have both the oral C5 inhibitor and the protein therapeutic multifunctional complement inhibitor advance into IND-enabling studies later this year.
So in summary, we continue to progress well towards our goal of delivering inhibitors for every pathway in the complement system. Overall, the depth and breadth of our pipeline provides balance and great potential with a diversified set of molecules moving forward. This allows us to increase the likelihood that our pipeline today will produce our next drug in the market tomorrow. We are excited the pipeline is now advancing into the clinic with multiple programs. Next, I’ll turn it to Anthony for a financial update.
Anthony Doyle: Thanks, Helen. You can find our detailed first 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 $92.8 million, $88.9 million of which came from ORLADEYO with the remaining $3.9 million coming from RAPIVAB sales. That puts ORLADEYO trailing 12-month revenues at $346.4 million with Q1 revenue increasing 30% over Q1 of 2023. Of the $88.9 million of global ORLADEYO revenue sales, $80 million came from US sales, with the remaining $8.9 million or 10% coming from ex-US sales. The 30% year-over-year increase in sales was primarily driven by the strong underlying patient growth that we have continued to see quarter-over-quarter.
The $4 million improvement in Q1 performance versus our previous guidance of $85 million was primarily driven by the efforts of the commercial team to improve and accelerate the reauthorization process. That’s $4 million that last year we would not have been able to capture until Q2, but this year, the team managed to accelerate the timing and achieve it from quarter one. For Q2, we expect to achieve revenues of approximately $97 million. And as Charlie said, we’ve revised our full year revenue guidance to the higher end of the range between $390 million and $400 million. Operating expenses, not including non-cash stock compensation for the quarter were $93.6 million, an increase of $10.4 million over Q1 of 2023. Included in this are $1.3 million of one-time expenses related to the R&D structuring at the beginning of the year.
Full year 2024 guidance for OpEx is unchanged between $365 million and $375 million. With revenue up $24 million year-over-year at $92.8 million and OpEx up $10.4 million year-over-year at $93.6 million, we continue to see improved margin accretion and our operating loss for the quarter, not including noncash stock comp, was less than $1 million. Cash at the end of the quarter was up $338.4 million, and net cash utilization for the quarter was $52.4 million. Q1 is historically our largest quarter of the year for cash utilization. For context, last year’s Q1 was responsible for over 50% of total cash utilization for the entire year. Included in Q1 this year, we had $3.2 million related to the R&D restructuring and $6.9 million related to royalty payments to OMERS.
This is our first quarter of making such cash payments to OMERS. And as a reminder, while the royalties are considered a debt instrument for GAAP purposes, that cannot be called and ultimately should be considered more the long-time liability than true debt. Additionally, with the revised guidance for full year ORLADEYO revenue, this will result in an improved blended royalty rate as more revenue will fall into the above $350 million tier where royalties are at a reduced rate of 7.5%. Cash utilization will decline in the remaining quarters of the year as it did last year, closer to an average of $10 million to $12 million per quarter, and we expect to end the year with above $300 million in cash. It’s great to see the continuing strong performance of ORLADEYO.
The commercial team did an outstanding job to improve our performance during the reauthorization process, an improvement that we’d hope to continue and build upon in next year’s quarter one. This strength in revenue performance, supported by continued strong underlying patient demand, is what drives the revised full year revenue guide between $390 million and $400 million. And with full year OpEx remaining consistent with our prior guidance, we are in an even stronger position to deliver an operating profit this year when excluding non-cash stock comp. We will continue on our planned path to near-term profitability that we shared earlier in the year, approaching quarterly cash flow and EPS positivity late next year with full year cash flow and EPS positivity in 2026, all while continuing to advance our pipeline at full pace without the need to raise additional capital to get there.
Operator, we’ll now open it up for questions.
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