BioCryst Pharmaceuticals Inc (BCRX) 2019 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the BioCryst First Quarter 2019 Earnings Conference Call.

(Operator Instructions)

As a reminder, this conference call is being recorded.

I will now like to introduce your host for today's conference, Mr. John Bluth, Senior Vice President of Investor Relations and Corporate Communications.

Sir, you may begin.

Thank you, Ashley.

Good morning and welcome to BioCryst First Quarter 2019 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; Chief Medical Officer, Dr. Bill Sheridan; CFO, Tom Staab; and Chief Commercial Officer, Lynne Powell.

Following our remarks, we'll answer your questions.

Before we begin, I want to direct your attention to Slide 2, which discusses our use of forward-looking statements and potential risk factors regarding an investment in BioCryst.

As detailed on the slide, 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.

I'd now like to turn the call over to Jon Stonehouse.

Thank you, John, and thanks to all of you for joining us this morning.

2019 continues to be an exciting year of progress for BioCryst, and we know you're looking forward to seeing the 240-week safety and efficacy results from the APeX-2 study of oral BCX7353 for the prevention of hereditary angioedema attacks.

We are too, and we remain very confident that we will report these results this quarter.

We're also on track to file our New Drug Application for the United States by the end of the year and our Marketing Authorization Application for Europe in the first quarter of 2020.

We meet regularly with HAE patients as we did a couple of weeks ago.

And the anticipation and demand we hear from them for an oral therapy is consistent and resounding.

Many of these patients want the opportunity to live a normal life without the burden and discomfort of injections and infusions.

As a company, we're working every day to deliver this important new treatment option to them because we know they're waiting.

This focus on driving our programs forward also extends to our other oral treatment programs for acute HAE, complement-mediated diseases and FOP.

Following the successful completion of our ZENITH-1 trial of 7353 for the acute treatment of HAE attacks in the first quarter, we are in the process of preparing for and conducting our discussions on the Phase III study with regulators, and expect to commence the Phase III ZENITH-2 trial this summer.

On our earnings call last quarter, we announced that we were moving BCX9930, an oral Factor D inhibitor for complement-mediated diseases into a Phase I trial.

That trial is on track to begin this quarter and we expect to have the results at the end of the year.

We hope to get important PK and PD data from healthy subjects that will be very informative in guiding us through the remainder of the program.

Our oral ALK2 inhibitor for FOP is also on schedule to move into Phase I clinical trials in the second half of this year.

When you add it all up, we see an attractive pipeline with a number of important milestones that we believe have potential to create significant value for patients and shareholders.

Layer on top of that our first launch of a highly differentiated product in 7353 into the marketplace, and we see a very different and exciting BioCryst.

Even though we believe the oral profile of 7353 will lead to a high number of HAE patients wanting to try it, we are taking nothing for granted as we prepare to commercialize 7353.

As we build out our team in key areas, our company profile is attracting exceptional candidates with proven rare disease experience.

And we have added some extraordinary talent to the company across medical affairs, market access, marketing, clinical and regulatory.

Positive data from APeX-2 will only strengthen this and will be a catalyst for us to continue building out the team in anticipation of a U.S. product launch next year.

Now I'd like to turn the call over to Bill, who will walk us through our plan for analyzing and reporting APeX-2 results.

Thank you, Jon.

As we like the data readout from APeX-2 this quarter, we thought it would be helpful to review with you how we will approach the data analysis around the primary endpoint and the secondary endpoints in this trial.

APeX-2 is a randomized, double-blind, placebo-controlled, [3-on] trial testing 2 dose levels of orally administered, once daily BCX7353, 110 milligrams and 150 milligrams for prevention of angioedema attacks.

121 patients with Type 1 and Type 2 HAE were randomized from centers in the United States, Canada and Europe.

As a reminder, the trial enrolled very quickly.

In fact, it over enrolled, and with 121 subjects is powered at 99% to detect a 50% reduction in attack rate versus placebo.

To qualify for the trial, patients were required to have 2 investigator-confirmed HAE attacks during the running period of between 14 and 56 days from the screening visit, i.e., a minimum rate of 1 per 28 days.

In previous trials, the main baseline attack rate was always much higher than the minimum requirement.

We expect this will also be the case in APeX-2, and that the main baseline attack rate should be in the range of 2 to 4 per 28 days.

The primary efficacy end point of APeX-2 is the rate of investigator-confirmed angioedema attacks over 24 weeks of study drug administration.

So the analysis will compare the on-study attack rates of patients receiving 7353 at each dose level to the on-study attack rates of patients receiving placebo.

As specified in the protocol and agreed with the regulators, analysis will use well-established statistical approach called the Hochberg step-up procedure.

This controls family-wise Type 1 error associated with multiplicity of study arms and does not require specification of order of testing of the doses.

In this procedure, each of the two dose levels of 7353 is tested against placebo for the primary endpoint.

Statistical significance is met for both arms if both P values are less than 0.05.

If the largest P value is more than 0.05 than in the other arm, statistical significance is declared if it's P value is less than 0.025.

In addition, hierarchical testing is used to control the Type 1 error rate for multiple endpoints.

Testing may only proceed to the secondary endpoints if statistical significance is met for at least one dose for the primary endpoint.

If the secondary endpoints for the 24-week analysis of APeX-2 are in hierarchical order of testing, change from baseline in the angioedema quality of life score at week 24, the portion of days with angioedema symptoms through 24 weeks raises the investigator-confirmed HAE attacks during dosing in the effective treatment period beginning on day 8 through 24 weeks.

The secondary endpoints for each dose level that meet the primary endpoint are tested in the order I just mentioned.

Statistical significance at each step allows testing at the next secondary endpoint.

If a single dose proceeds to the next level in the hierarchy, statistical significance at the next level in the hierarchy is declared if P is less than 0.025.

In the absence of statistical significance, subsequent endpoints for that [first] level are not tested.

Following completion of the 24-week blind and placebo-controlled study period in APeX-2, subjects continuing an ongoing extension phase through 48 weeks.

Patients initially randomized to placebo are re-randomized to receive one of the two 7353 doses in the extension phase.

And patients initially randomized to 7353 continue on the same dose.

Subjects in APeX-2 who complete 48 weeks of 7353 will contribute to the NDA long-term safety database of 100 patients.

Our APeX-S long-term safety study also contributes to this total.

Both of these studies continue to progress well, and we are on target for an NDA filing by the end of the year and an MAA filing in the first quarter of 2020.

As Jon mentioned, we are also on schedule to begin a Phase III study with our acute program this summer.

And I would note that data from our Phase II ZENITH-1 trial will be presented at the upcoming C1 Inhibitor Workshop in Budapest in May and also at the EAACI Congress in Lisbon in June.

Now I'd like to turn the call over to Tom.

Thank you, Bill.

Our detailed first quarter 2019 financial results can be found in the press release we issued this morning and are summarized on Slide 8. However, I'd like to highlight some information to help you assess and understand our future operations and financial statements for the remainder of 2019.

From a financial perspective, the first quarter was relatively quiet and uneventful with the notable exception of extending our cash runway and enhancing our financial flexibility by closing $100 million secured credit facility in February.

This closing represented an enhancement of an existing credit facility and thereby provided us $20 million of immediate additional non-dilutive capital and the ability to draw another $50 million of milestone-based, non-dilutive capital at par option.

As a reminder, $30 million of this additional $50 million is available following positive APeX-2 data, which we consider sufficient to file a New Drug Application.

This modified credit facility provides us optionality and flexibility of a liquidity standpoint.

In regards to cash and investments, we ended the first quarter of 2019 with $121.6 million.

We have a strong cash position that provides the resources to fund our development programs and continue our commercial preparation into 2020.

Importantly, our cash run rate extends beyond our APeX-2 readout later this quarter as well as our NDA filing and Phase I readout for BCX9930, which are both expected to occur in the fourth quarter.

As you can see on Slide 8, revenue for the first quarter of 2019 increased $1.9 million to $5.9 million.

This increase was largely due to the recognition of $1.7 million of peramivir product sales to one of our collaborative partners.

These transactions are based on inventory management by our partners and each partner's overall forecasted demand for the underlying peramivir product.

Importantly, these transactions do not recur routinely and are difficult to predict in regard to timing and magnitude.

Accordingly, you should not assume these product sales will recur in future 2019 quarters.

Regarding operating guidance as noted on Slide 9, we continue to expect net operating cash use to be in the range of $105 million to $130 million and 2019 operating expenses to be in the range of $120 million to $145 million.

As mentioned in our fourth quarter 2018 results conference call in March of this year, we continue to expect our R&D and D&A expenses to increase from 2018 levels due to the continued progression of all of our programs.

Consistent with prior quarters, the company's operating expense range excludes equity-based compensation expense due to the difficulty in reliably projecting this expense as it is impacted by the volatility and price of the company stock as well as by the vesting of the company's outstanding performance-based stock options.

Lastly, with the modification of our secured credit facility, you should expect higher interest expense for 2019 because of higher debt balances than those in 2018.

We have had an excellent start to 2019, and look forward to sharing the 24-week safety and efficacy results from APeX-2 with you later this quarter.

That concludes our prepared remarks, and we will now take your questions.

Ashley?

(Operator Instructions) And our first question comes from the line of Brian Abrahams with RBC Capital Markets.

This is Bert on for Brian.

Can you give us any further clarity on when we might see the APeX-2 data in second quarter?

And then also, you've previously cited 50% as the bar for a [tack] reduction.

How does your market research, prior data, PK-PD mapping and OLE observations all shape your expectations for the readout and/or the threshold to try and meet?

Thank you.

Sure, Bert.

I'll take that.

So no, we're not giving any further granularity on timing other than to say it's coming this quarter; so soon.

And then with regard to your question around 50%, I mean the market research is really interesting.

The preference for an oral drug is so strong that you can vary the efficacy up to 85% all the way down to 55% and see small changes in preference share.

So the point we're trying to make is there's just a really, really strong demand for an oral drug.

And our next question comes from the line of Jessica Fye with JPMorgan.

This is Daniel on for Jessica.

You mentioned in the prepared remarks mean baseline attacks rates of 2 to 4 per 28 days in APeX-2.

Is that lower than what was observed in APeX-1?

And given what sounds like less basic patients in Phase III versus Phase II, how should we think about the on-treatment placebo response?

Thanks.

This is Bill.

Thanks for the question.

This study is 24 weeks long.

APeX-1 was 4 weeks long.

And the way the statistics work in studies where you're counting events is you have to have a certain number of events to count in order to show a difference of placebo.

So you have 6x longer opportunity.

Even if the attack rate was much lower than the baseline attack rate that I mentioned, there's very high probability that we'll see more than 4 events in 24 weeks.

So I'm not worried about that at all.

It's impossible to handicap the likelihood of placebo response in these studies.

It seems to vary a lot depending on the conditions of the type of run-in and where the patients came from, what treatment they were on previously and so on.

The analysis that matters, of course, is the on-study attack rate in placebo compared to the on-study attack rate in active.

So that's the way we've structured the study and the powering.

All right.

And what are some of the end points are you considering for ZENITH-2 that could highlight differentiation of the product in contrast to currently available therapies in the acute setting?

So as Jon mentioned, we're in the process of meeting with regulators on the design of the Phase III for the acute program.

It's competitive.

So there's no advantage for us to advertise what we might or might not be selecting for the primary endpoint of their Phase III at the moment.

But we're very, very pleased with the results of ZENITH-1.

We're very happy that it's been accepted for presentation at the biennial C1 Inhibitor Workshop in Budapest and also that the huge European Allergy meeting, EAACI that is coming up.

So there's tons of interest in it.

This is a groundbreaking study in the context of acute treatment at home as early as possible after the onset of symptoms.

So we're thrilled with the results.

Yes.

And I would add, without going into the detail of what the endpoints are since we haven't agreed on them with the regulators yet, what matters is does it go to work quickly ? And I think that's table stakes for any acute treatment.

And then how long does it last?

And the problem with the short half-life drugs is that there's data that's come out recently that says that you've got to redoes.

And so with a really long half-life like we have with 7353, we have a high degree of confidence that a single dose will manage an attack.

So we think that's a fantastic profile and very competitive.

And our next question comes from the line of Liisa Bayko with JMP Securities.

Thanks for the review of the statistical plan and all of that.

Can you maybe just also further comment on the adjudication of the attacks?

How will they be adjudicated to ensure that they are truly attacks versus some other artifact or what have you?

Sure.

So in the Phase III trial, APeX-2, the procedure is that the patient every day records in their electronic diary whether or not they've had an angioedema attack within the last 24 hours.

If the answer is yes, then that information is notified automatically to the relevant site that is looking after that patient.

And the investigator is charged with contacting the patient by telephone within approximately 2 business days to have a dialogue and make an assessment and record the investigator assessment in the case record.

That is what gets analyzed as the primary endpoint.

So because of that process, the investigator has the ability to understand the symptoms, the onset, the treatment, whether or not, if it was given, whether or not the treatment had any effect, whether the symptoms were similar or not to the past experiences of the subject and make an assessment that is taking into account a conversation and all that information.

In our Phase II study, we had a panel of experts who were reviewing paper information in batches often months after the event.

Obviously there's no possibility of interacting with the subject at all under those circumstances.

So it's more difficult to make nuance judgments when you can't do that.

Okay.

That's great.

That's helpful.

Can you comment at all on kind of proportion of rollover onto the open label?

So we will know that coming up soon, obviously.

This quarter when we have the analysis, then we'll be happy to comment on that.

I think that what I've previously guided in terms of persistence on-study through 24 weeks, these are demanding studies for patients.

There are clinic visits, blood samples, ECGs, what have you.

So that's not normal life.

And an expectation of a 10% to 15% dropout rate under those circumstances is reasonable.

Okay.

And then, but you're not commenting on how many people despite that, rolled over onto the open label?

Yes, because this study's still ongoing.

So until we have the final results, that's a really good time to tell you that information.

It will be an interesting statistic for sure, yes.

How important do you see the secondary end point?

Say that again?

How important are the secondary end points?

Well, I think we carefully select secondary end points in pivotal studies because the objective here is to get information that helps physicians and other health care providers assist the drug into the label and helping selection of therapy.

So for example, we had a very strong signal for improved quality of life in our Phase II study.

If that could get into the label because it was successful in our secondary endpoint analysis, that would be very important.

This is Lynne here.

Commercially, we'd be very excited if the quality of life data could get in the label.

What we saw in Phase II was incredibly impressive, and we're looking that that would be replicated in this next study.

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

I also have one question regarding APeX-2 trial.

In Europe there will be more patients have a prior androgen use.

Just wondering, do you stratify patient based on the androgen use?

Any restriction in terms of the duration of the usage and the washout period?

Thanks, Gena, for the question.

So it will be an interesting analysis as to whether or not the prior experience with androgens is different for subjects entering this study in North America versus Europe.

But quite a lot of people in the United States are actually still on androgens.

So obviously it doesn't appear in the market because it's a generic drug.

But our estimates are that probably between 10% and 20% of patients with HAE in the U.S., are currently on androgens.

And many, many, many patients have had prior experiences, because that was all that was available some years ago.

So it'll be interesting to see whether there's a difference.

I think that the other main part of your question was what are our entry criteria?

There are no restrictions on prior therapies.

There is a restriction on washout period for prior therapies, and for androgens it's 28 days prior to screening.

And she also had a question around stratification.

Do we do any...

No, there's no stratification on that basis.

Our practice consistently in our prophylactic HAE studies has been to stratify on the basis of baseline attack rate, and that's the case here.

All right.

That's very helpful.

Just want to confirm, so the washout period will be 28 days, right . . .

Prior to screening.

Prior to screening.

So as I mentioned...

Prior to screening?

In my remarks -- yes, prior to screening.

In my remarks, then there's the prospective run-in that's compulsory.

Every single patient has to go through that, and that can vary from 2 weeks to 2 months.

Then they have to make an appointment to come for a randomization.

So the actual duration, if somebody stopped androgens a month before screening, the actual duration prior to getting our drug could be up to 3 months, 4 months, but 5 months [actually].

I see.

I see.

So what's the purpose for running phase at 14 to 15 -- 56 days, such wide range?

We chose the minimum period because we wanted to see some sort of consistency.

And you have to put some maximum period on it, otherwise, you're waiting forever to see what the attack rate is and you need to finish the study.

So giving people the opportunity to have 2 attacks within 56 days establishes a minimum of 1 per 28 days as a rate.

(Operator Instructions) And our next question comes from the line of Maury Raycroft with Jefferies.

First question is just on 7353.

And as patients continue on drug and cross over to the open label extension, what's the longest duration patients have been on the drug?

Across both studies, we have people now out past a year.

Got it.

Okay.

And then as far as your statistical plan and the powering assumptions for the base or primary endpoint go, can you say what the lowest the attack rate reduction could be, and I guess what you're decision tree would be based on something dropping lower than 50%?

So to answer your first question, we haven't done any formal explorations.

Obviously it depends on the actual observed standard deviation and the data that we get.

Certainly it may well be possible to show a statistical significance for a lower percent reduction in attack rate.

Yes.

And on the second half of your question around how low could you go, I mean I think we're kind of setting ourselves around the 50%.

If it was 48%, would we say no?

Probably not.

But I think that 50%, that's a meaningful reduction in attacks for people, so somewhere in that area.

Got it.

So even if it's at around 50%, i.e., probably -- or if it goes below 50%, then you may not move forward at that point or come up with a different game plan?

Yes, I reserve the right to see the data and make that decision, because, again, we'd like to get the input of KOLs and the patient association and things like that.

But I mean the conversations we've had thus far have been incredibly encouraging down below 50%, from those groups.

So that's not our expectation.

But your question, I think because it's oral the efficacy doesn't have to be as high.

Got it.

Okay.

And then last question is just based on APeX-J starting.

And I was wondering if any data from that study would be included in the U.S. filing.

And I know you've guided to having about 100 patients on each dose for 7353 included in your NDA filing.

So should we assume that you're going to have about 200 patients total?

Or do you anticipate more patients than that?

Well, so just to be clear, all of the data on safety that we currently have at the time we cut the data later this year, will be included in the NDA.

So there'll be a minimum of 100 patients worth of data through 48 weeks.

APeX-J will be still blinded.

So that won't contribute to any efficacy analyses for the NDA.

That study was negotiated with Japan's PMDA to complete the Japan development program and support J-NDA.

Yes.

And I think with regard to your question of how many patients worth of data will we submit, what we need is 100 patients at 48 weeks.

If a high dose looks clean and we believe we're going to file both doses, that's enough for the filing.

Or we'll just file the high dose.

So we have lots of options.

And our next question comes from the line of Serge Belanger with Needham.

This is [Tan] on for Serge.

I just have a question about APeX-2.

Is the safety extension portion of that trial, is that also to be read out in 2Q '19?

And also the APeX-S trial, is that also part of the NDA submission for the 4Q '19?

So the analysis in the second quarter is the 24-week analysis of APeX-2.

So the answer to your first question is no.

That's the pivotal placebo-controlled efficacy and safety that's going to support the submission.

The long-term safety follow-up will be ready later this year from both studies, from APeX-S and APeX-2, and that'll be compiled to submit in the NDA.

And our last question comes from the line of Tyler Van Buren with Piper Jaffray.

Thanks for the additional detail and the statistical analysis.

I guess I just had a point of clarification.

Is the Hochberg step-up procedure the analysis that was used in the TAKHZYRO and HAEGARDA pivotal trials?

I'd have to look it up.

The Hochberg is simply a way of controlling for multiplicity of having two arms instead of one versus placebo.

And we've utilized it in that way.

The type of analysis of the data is -- and you can read this in the publication from the TAKHZYRO study, it'll be very similar to that in terms of how you do the analysis.

You're counting events and statistical approaches to how to analyze and compare counts of events that turn into rates.

In phase 3 trials, depends on whether or not -- this may be a bit too technical.

But it depends on whether or not the distribution is overdispersed or not.

If it's overdispersed, it's binomial, and if it's not, then it's Poisson.

So I hope that helps you.

And all of that, of course, is agreed with regulators and totally standard.

That does.

That's great.

And your updated thoughts on acceptable discontinuation rates for a trial of this sort and this design?

So the fact that we over enrolled give us quite a bit of flexibility here.

10% to 15% dropout rate during the placebo control period is quite acceptable.

Okay.

That's helpful.

And a final question is you guys have spoken about commercial preparations.

So assuming the trial's positive, clearly coming in with an oral, you have a chance to disrupt a space that's really been dominated by a couple players at a very high price.

And I think there's a level of physician frustration because of those market dynamics.

So can you, again, assuming the trial's successful, can you speak towards the commercial preparations and how you guys plan to approach the market with a product of this profile?

Yes.

It's Lynne here.

So we have, as Jon said earlier, been actively recruiting in marketing, market access, medical [bed] . We have been doing multiple pieces of market research to understand the market.

And what we're really prepping for is to really give patients and physicians what they want in terms of service and have the opportunity to try an oral therapy, which is what they tell us they want.

So in terms of pricing, what's really important in pricing is to understand what our profile of drug is.

But we are certainly entering into a situation with very high-priced competitors.

So we will be looking at all options in terms of what we do with pricing.

Yes.

And Lynne's being modest.

She's put a lot of energy and resource towards gathering data to be smarter than anybody in this space.

And there's a lot of switching going on right now with the other therapies that are being introduced.

And so her team is analyzing the behaviors and what drives people to switch successfully and unsuccessfully.

And then we'll apply that learning to our launch plans.

But what's great about this drug is that we are hearing from patients and physicians that the trial usage of this drug is going to be really high.

So the other thing Lynne's team is doing is, how do we keep them on the drug?

And so we're getting really smart about that and putting in plans in place to be successful with that.

Ladies and gentlemen, this concludes today's Q&A session.

I would now like to turn the call back over to management for any closing remarks.

Yes.

So as I said at the beginning, this is a really exciting time for BioCryst.

We're preparing for a very important filing of 7353 for prophylaxis.

We're preparing for the launch in the U.S., in Europe as well.

And we'll have the data soon and we look forward to reporting it out to you.

Have a great day.

Ladies and gentlemen, thank you for participating in today's conference.

This does conclude today's program, and you may all disconnect.

Everyone, have a wonderful day.