BioCryst Pharmaceuticals, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to the Biocrist First Quarter 2021 Earnings Call. Please note that today's call is being recorded. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask your question during the session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker for today, John Bluth at Biocrist. John, the floor is yours.

Thanks, Jay. Good morning and welcome to Biocrist's first quarter 2021 corporate update and financial results conference call. Today's press release is available on our website. Participating with me today are CEO John Stonehouse, CFO Anthony Doyle, Chief Commercial Officer Charlie Geyer, Chief Medical Officer Dr. Bill Sheridan, Chief Business Officer Megan Stasinski, 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 on audited 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 John Stonehouse.

Thanks, John. I couldn't be more excited to have our first earnings call with revenue from a Biochrist launch product. This is the latest evidence that our company is going through a major transformation. Sales were very encouraging in Q1, especially considering this is our first quarter of the launch of Hortodeo. This is a direct result of focused execution of our plan by the Biochrist team, and the desire to build a great company that can discover, develop, and now successfully commercialize oral medicines for patients suffering from rare diseases. Very few companies can do all three. The launch is off to a great start because we have a great drug. It works. Patients are experiencing meaningful reductions in their attacks, and they can achieve this by taking one capsule once a day. This is leading to patient switches from injectable protein on-demand therapy. It's exactly what we saw in our market research and clinical trials, and it's already playing out in the marketplace. Great drugs don't sell themselves. We also have a fantastic team. Charlie and Alan Hodge, our USGM, have assembled an experienced team, but more importantly, they're working together, working through challenges and obstacles like COVID and achieving great results. We couldn't be more pleased with the start, and the good news, we're just getting going with so many more patients to reach in the U.S. While the U.S. is the largest market, we now have approval in other major territories around the world. Our partner, Tori, is launching in Japan, and we recently received approval in the EU. The same planning and investments were made here, too. The launch ramp will take longer, as these are different markets from the U.S., But we expect these countries to contribute over time to our goal of achieving $500 million plus in global peak sales. And finally, our pipeline is full with the opportunity we have with our oral factor D inhibitor, BCX9930, for patients suffering from many different complement-mediated rare diseases. We're heading into pivotal studies in PNH and proof-of-concept in nephritis indications. We will apply all the learnings of our HAE program and build off that success to bring 9930 to market to create even greater value as a company that discovers, develops, and commercializes multiple oral drugs for patients suffering from rare diseases. Now I'll turn the call over to Charlie to go over more details about our early launch success. Charlie?

Thanks, John. The early data launch is off to a great start. We're pleased but not surprised. We knew we had a great drug that patients want because they are tired of the physical, psychological, and logistical burdens of injectable therapies. Physicians also tell us they are confident in prescribing Orladeo for a broad range of patients when they see the long-term data on attack reduction, safety, and tolerability. Here's what we're seeing so far. In a very competitive market, patients are switching to Orladeo. Over half the patients starting Orladeo for the first time are switching from injectable prophy. The rest are switching from acute treatment only now that they have an oral once daily prophy option. In fact, the majority of patients on Orlodeo by the end of Q1 were those who switched from other products. The rest were patients transitioning from our clinical trials and early access program. The prescriber base also continues to expand. Former clinical trial investigators accounted for a minority of Orladeo prescribers in Q1. Roughly 500 physicians treat 50% of HA patients, and our team has reached nearly all of them. Most of these physicians tell us they intend to prescribe Orladeo, but only a minority have done so thus far, so there is a lot of room for growth. And finally, payers are reacting favorably to Orladeo. Most of the reimbursed product in Q1 came through medical exceptions. but many payers and PBMs also establish coverage policies. Our momentum with payers is strong, and we expect the great majority of patients to have access to coverage for Rolodeo by mid-year. The most important investment we made in this launch was building an experienced commercial team that knows how to execute. Our U.S. General Manager, Alan Hodge, and our U.S. VP of Sales, Ron Dellinger, launched Synrise over a decade ago and successfully created the first market for HAE Profi. They came to Biochrist because they always knew that an oral drug is what patients really wanted. They attracted a talented and agile team that understands the importance of fighting for every patient in a competitive rare disease market like HAE. As excited as we are about the Q1 results, this team is just getting started. COVID has limited in-person sales calls, but vaccines are starting to change this. Our marketing programs are just starting to kick in. and expanding reimbursement access is giving patients and prescribers even more comfort in switching to Orladeo. We are very confident about the growth trajectory, and we believe Orladeo will reach peak global sales north of $500 million. The U.S. is the first and largest part of that opportunity, but we expect meaningful sales in Europe. Awareness and understanding of HAE in Europe is on par with U.S., but use of targeted HAE prophylaxis has lagged based on lack of options. Our work with European physicians and patients tells us that the availability of new options, and specifically an oral once-daily therapy, will more than double prophylactic treatment share to 60% or more of patients. We are taking the same approach in Europe as in the U.S., investing in experienced commercial teams that know how to launch rare disease products. Orlodeo will launch in Germany this quarter, and early access programs are active in France and the United Kingdom. We look forward to sharing more about Europe in the coming quarters. And there is yet another Orlodeo launch underway right now in Japan. I'll turn the call over to Megan to describe how our partners at Torrey Pharmaceutical are approaching this opportunity.

Thanks, Charlie. We're excited the Japanese launch is now underway after successfully completing the NHI price negotiations last month. There are a few important points I want to emphasize again regarding the commercial opportunity in Japan and what makes it different from the U.S. and Europe. First, Orlodeo is the only approved prophylactic therapy in Japan. With no competition, Tori has a head start in building the prophy market. and our oral once-daily medicine is well-suited for a population that tends to prefer oral drugs over injections. Secondly, while the vast majority of HA patients in the U.S. and EU are already diagnosed, Japan lags behind. Only about 20% of patients are identified in the registry today. Tori is focused on finding patients and helping to advance their standard of care by providing access to the first approved prophylactic medicine. One reason we chose Tori was based on what they accomplished with Gilead's HIV franchise. Their strategy focused on driving disease awareness among physicians and increasing patient identification. This strategy was very successful as they grew the business to almost $200 million annually. This experience served as a strong foundation heading into Orla Deo's launch. And similar to us, Tori has been preparing well in advance and are fully focused on supporting a successful launch. Lastly, through our partnership economics, we have triggered the $15 million milestone payment following pricing. And we get to share in Tori's success with a tiered royalty from 20% to 40% of net sales. Overall, the Japanese market provides an outstanding long-term opportunity. We see a strong potential to follow a path similar to what we've seen in the U.S. in the last decade, an expansion of the HEE market driven by patient diagnosis and adoption of prophy treatment as part of standard of care. As Charlie shared, there's a lot of early momentum in the U.S. launch, and we're not surprised by this excellent start. Over the course of this year, you will continue to see new clinical data highlighting how well patients do on Orlodeo over time. Patients are getting their disease under control while reducing the impact treatment has on their lives and independence. Our work is also helping physicians understand how Orlodeo is an ideal treatment choice for all patients. It offers patients the attack control they desire and the lifestyle freedom and benefits of a convenient, more discreet oral once-daily pills. Our strategy remains focused on shifting this treatment paradigm. As Charlie spoke about earlier, patients are switching, which is early evidence our strategy is working. We see a very similar unmet need and opportunity in the complement space with our Factor V program. I'll now turn it over to Bill for more on our 9930 progress. Bill?

Thanks, Megan. For everyone who discovered and developed Oladeo and our clinical trial collaborators around the world, it's just so great to see the Oladeo launch doing so well. For hereditary angioedema, Oladeo is effective, it is safe, and because it is oral, dramatically reduces the burden of therapy. A very similar shift is beginning for patients with paracisal nocturnal hemoglobinuria, a very serious rare disease with no approved oral treatments, and whose standard of care is lifelong intravenous infusions. BCX9930 has a great opportunity to substantially improve disease control in TNH compared to the currently available intravenously infused C5 inhibitors. These do a good job controlling intravascular hemolysis, but many patients remain anemic, are still transfusion dependent, and continue to suffer from symptoms like fatigue. That's because C5 inhibitors cannot control extravascular hemolysis. These clinical advantages come on top of the obvious patient benefits of oral administration, and we are moving the program very quickly to get this medicine to patients with PNH. I'm pleased to report that we've now reached agreement with the FDA on both the design and the endpoints for our PNH pivotal trials. The two pivotal trials each test oral BCX9930 monotherapy and will support the indication of treatment of PNH. The dose will be 500 milligrams BID. One trial will include patients who had an inadequate response to C5 inhibitors, and the other trial will include patients not currently receiving complement inhibitors, including those naïve to these drugs. Patients in both categories need relief of anemia, freedom from transfusions, and relief of symptoms. The primary endpoints of both pivotal trials agreed with the FDA will be changed from baseline hemoglobin, a direct clinical measure of relief of anemia. In both trials, we will measure the impact on needs of transfusions as a secondary endpoint, and we will also capture other important outcomes in TNH, such as fatigue scores, TNH clone size, and laboratory biomarkers of hemolysis. The outstanding results will be reported in March. with mean hemoglobin change from baseline of 3.3 grams per deciliter in C5 inadequate response patients and 3.5 grams per deciliter in treatment-naive patients, positioned BCX9930 very well for success in our pivotal trials. As you heard in March, hematologists and patients with TNH are very excited by the prospect of a treatment that could dramatically improve outcomes and eliminate the need for IV infusions. We are convinced that success in our pivotal studies will drive a paradigm shift in PNH towards oral proximal complement inhibition with BCX9930. So, what's next in this program? We are now ready to move directly into the pivotal trials in PNH in the second half of the year using the designs now agreed with the FDA. We will also move into a proof-of-concept trial in selected nephritis indications in the second half of this year. V69930 represents a pipeline and a molecule. We're very excited to be moving this program so quickly because we know patients are waiting. Now I'd like to hand the call over to Anthony.

Thanks, Phil. We've continually said that we are focusing our investments where they can drive the greatest value. With Orlodeo now approved in three key global territories, the commercial team in the U.S. getting the launch off to a great start, and the very positive data that we have with BCX 9930, we are executing this strategy, and we are well positioned for future growth. You can find our detailed financials in today's earnings press release, and I'd like to call your attention to a few items. Net revenue for the quarter was $19.1 million. Of this, $10.9 million came from sales of Orladeo in the U.S. Our operating expenses, not including non-cash compensation, for the quarter was $63 million. with the incremental investment from previous quarters focused on the development of BTX 9930. We ended Q1 with $244 million in cash. This cash, in addition to access to the additional $75 million from Ethereum, and now revenue from Orladeo, continues to give us cash runway into 2023. Since this is our first full quarter of Orladeo revenue, I wanted to take a minute to remind you of our approach on a couple of key items. We recognize revenue when our sole source specialty pharmacy ships Orlodeo to patients for use. Each shipment contains a 28-day supply of Orlodeo. These are shipments directly from the specialty pharmacy to patients, so they are true sales, and you will not see any inventory or channel stocking in our revenue numbers. When we look at gross to net, the biggest impact at the moment will be driven by non-reimbursed shipments. Our quick start program has proven to be a real differentiator. and is delighting customers in the ease and speed of getting access to order data, sometimes within 24 hours of a start form being submitted. The Quick Start program and our patient assistance program both resulted in the gross to net adjustment being higher now than it will be once the launch is in a more mature phase. Because gross to net is so fluid early in the launch, we are not providing gross to net guidance, But as we continue to progress with the launch, you should expect our growth to net adjustment to move in line with other rare disease products. So what does our strong Q1 mean for future periods? Charlie's team did a great job of converting clinical trial patients, giving us a bolus of patients in the first quarter. Additionally, the team has achieved great success in helping many new patients switch from injectable prophylactic or acute-only medications. Together, this gives us a really strong foundation for future periods. We have not provided revenue guidance, as there are still several variables that will impact the growth trajectory of revenue that we need more time to better understand. First, what is the steady state of monthly prescriptions? While we've been very encouraged with the numbers to date, we need more time to see it play out. Next, what does customer retention look like over a longer time? In our clinical trials, this number was about 75% through 48 weeks, telling us that Orlodeo is well-tolerated and is providing outstanding attack control. While we believe we will see this level of persistence in the market, it's still too early to confirm that this is the case. And lastly, what does the trend look like when the vast majority of patients have reimbursement? The $10.9 million... in net revenue we're reporting is only from patients whose Orlodeo prescriptions are reimbursed. As Charlie described, we're making good progress getting Orlodeo onto policies, but the pace of reimbursement over, especially the second quarter, will be a key driver in the rate of revenue growth for us over the remainder of the year. While we're early in the launch, we are very encouraged by the results to date. We have a lot of work to do and a lot more patience to get this next generation of drug to. We have a great product in Orladeo. There is strong patient demand for it, and we have the team to execute on making our launches a success and getting us to our peak target of $500 million plus in the coming years. With that, I'll hand it back over to John.

Thanks, Anthony. This is what execution looks like. We're off to a great start with the launch of Orlodeo in the U.S. and starting to launch in other major parts of the world, all contributing to what we believe will be a $500 million-plus global peak sales product. Add to that our plan to advance into pivotal studies in P&H with 9930 and, in parallel, moving into other indications with this pipeline in one molecule. And finally, having the financial flexibility that comes with a strong balance sheet and revenue generation allows us to focus on execution and value creation. The evidence is clear that Biochrist is transforming into a company with product revenue, a full pipeline, and a discovery engine that produce these compounds and will continue to produce more. That concludes our prepared remarks. We'll now open it up for your questions.

Thank you. And as a reminder, if you would like to ask a question, please press star, then the number 1 on your telephone keypad. Once again, that's star 1 on your telephone keypad. If you would like to withdraw a question, please press the found key. Thank you. Our first question comes from the line of Jessica Fai of JP Morgan's. Your line is open.

Hey, guys. Good morning. Congratulations on a strong quarter. I was curious if you could add some more color about specifically which agents you see the patients switching on to Orla Deo switching from.

Do you want to take that?

Yeah. Good morning, Jess. Thanks for the question. We're seeing patients switch from all the different therapies really in proportion to what you'd expect from their market share. So as I mentioned, more than half the patients are switching from injectable trophies, and that means Taxairo, Higarta, Synrise. proportion to their market share.

Okay, thanks. And you mentioned that some scripts were not reimbursed in the quarter. Can you say what proportion of first quarter scripts were not reimbursed?

Yeah, we haven't commented on the specific details, but as Anthony mentioned in his comments, what we're doing with nearly all patients is starting off on our quick start program. And then we work with patients and providers to go through prior authorization. And in Q1, most patients got access through medical exception. But we're making great progress with payers, and we expect to make continued progress through midyear.

And, Jess, Charlie made comments in his prepared remarks around, you know, the more policies that are in place, where all the data is on formulary, the more interest there's going to be by both doctors and physicians. Yes.

Got it. And just the last one, on gross to net, you mentioned that longer term that will move in line with other rare disease drugs. So can you just characterize what typical gross to nets are in rare disease?

Yes. From a gross to net perspective, what we'd be looking at getting is kind of into the teens 20 type of frame.

Great. Thank you.

You're welcome. Thank you. Next question comes from the line of Lisa Beko of Evercore ISI. Your line is open.

And I wanted to add my congratulations on a great quarter. I'm going to turn to the PNH studies for a moment. Can you maybe discuss what sort of control arms will look like in both of the studies?

Phil, you want to take that? Sure. Sure. Hi, Lisa. Thanks for the question. I'm super excited about moving into these studies, of course, and one study will be a superiority trial against C5 inhibitors in patients who've had an inadequate response, and the other study in patients who are not taking a C5 inhibitor, the control group will be placebo.

Okay, I see. And can you maybe describe the, I guess, how you'll be looking at superior to C5? Will you be looking at combination therapy then for the patients that are inadequate responders, or will people be moving on to monotherapy? How will that work for the inadequate responders?

Sure. Both studies are designed as tests of PCX9930 monotherapy therapy. So patients will be randomized to, in the C5 inhibitor trial, be randomized to continue their current treatment or start BCX9930 monotherapy and discontinue their current treatment. So the goal here is a label for monotherapy with a broad indication to treat patients with TNH. The reason for those study designs, as we just outlined, is to support that type of labeling.

Okay. And how do patients go on to monotherapy from being on the C5? How does that work? Is it just a kind of cold turkey switch or is there a combination therapy and then a withdrawal?

No. How does it work? No. The C5 inhibitor is stopped and the oral drug is started. It's just a simple switch.

Okay. We haven't seen the data yet in that population in terms of being on monotherapy. Can you give us a sense of when you might see that in your phase 1, phase 2?

Sure. You know, the protocol doesn't specify a particular timeline, and it's a physician judgment call, but we expect that we'll be able to share data at the end of the year. Neither the regulators nor us are waiting for that data in order to start the studies, because we're very confident in the drug on the basis of the monotherapy results from the naive patient population. You know, the disease is the disease. The factor D target's the same. The dose is the same. So, you know, it's not necessary for us to see that data before we start the studies. Okay.

Good. And then I guess just turning to Orladeo, really great out of the gates. Is there any kind of additional color you can provide on either, you know, the percentage of patients that were on your quick start program receiving drugs that way, you know, the percentage of prescriptions, like, and or any color on persistence? Those are obviously the key. questions to help guide us as we think about, you know, the rest of the year launching off of this, you know, really great start. So just hoping you can provide some additional color there. And that's my final question. Thank you.

Sure, Lisa. So on the percentage of quick starts, so in Q1, nearly all patients started on quick start, and that's part of our strategy. as we work with them to get access. And as I mentioned, most patients got reimbursement through medical exception. If we were not able to do that in Q1, they'll continue on free good until the payers establish policies. And then as far as your question about persistence, as Anthony mentioned, we had great results in our clinical trials with about 75% of patients staying on for at least a year. That's what we expected in the real world. So far, the patient experience has been great, but it's too early to say what the long-term persistence rate will be.

Okay. And that patient quick-start program is about, is it a monthly prescription until you get on?

No.

Reimbursement?

That's right. It's a month, and if there's not reimbursement in a month, we will continue them either on Quick Start or on our patient assistance program.

Okay. I guess I'll just leave you with one final question. Approximately how long is it taking to get on to reimbursement at this point?

So in Q1, it's all over the board, everything from a few days to patients still being on the program. And by mid-year, we expect that to really stabilize. as the great majority of patients will have access to coverage through their plans.

Yeah, and Lisa, the theme here is that as the year progresses, we will have more and more people on paid drug and fewer and fewer on Quick Start. That's the plan.

Okay. All right. Thanks a lot, guys.

Thank you.

Thank you. Next question comes from the line of Ken Kashatori from Cohen & Co. Your line is open. Thank you.

Hey, guys, congratulations on the early progress. Just wondering, we hear really good things about the interactions on both the clinician and patient level via your hub. So just wondering, as it seems to be ramping a little bit faster, do you feel you're staffed appropriately? Can you talk about some of the early learnings? from this really kind of more personalized approach and things that, as things are getting underway, that you're maybe changing or, again, if you're staffing a little bit more. Then on EU, just wondering, it looks like a potential really focused selling effort. Can you talk about where these patients are domiciled? Is it going to be fairly easy to get at them, fairly difficult? Maybe some of the learnings from the injectables I know you feel and we feel as well that things should go better there, but maybe a little bit more nuance around Europe. And then lastly, maybe for Bill, I know it's really early, you're just announcing you're going to start these pivotals. If you take a shot at timing of results, maybe a little bit of nuance here in terms of the kind of competitive landscape to enroll patients, but any kind of shot at when we might expect to see data would be fantastic. Thank you.

Great. Thanks for the questions, Ken. So the first question you had just about our specialty pharmacy patient services program and staffing, one of the great things about having a sole source is we really prepared for the right staffing. And then Alan Hodge and his team have done a great job working with ESP to pivot as we see this demand from patients. So increasing staffing appropriately, increasing procedures appropriately, They're really quick in making those changes to serve the patients well, and it's making a difference. As far as the EU, a really good question about, you know, access to patients and how easy or difficult is that. The great thing about the EU is that treatment centers are very concentrated, so you can literally have hundreds of patients within a given center. And so what our teams are doing is working with the HEE experts at those centers to to make them aware that Orlodeo is coming and to reach out to their patients and bring them into the center. So we're really enthusiastic about the opportunity there.

And can I add that, you know, BioChrist is a known entity to these docs that treat HAE in Europe. I mean, we've been doing clinical trials all the way back to our first-generation program. And so we've got fantastic relationships, and they know the company. They've been involved in our trials, and so the excitement level is high. Yeah, go ahead. Yeah, sure.

So, Ken, what a great question. When will the study finish? I wish I could be specific and give you a prediction. I think it's really difficult at this stage. We need to get them up and running. What I can tell you is that we have a great clinical execution team here at Barcrest, and we are going to approach this on the basis that patients really need this It's going to be a major advance in PNH. That's what we believe. And so we'll be ramping as fast as possible. And just like in HAE, we'll go to the best centers all around the world to get these studies done. And just like HAE, in most rare diseases, getting patients on clinical trials is a competitive activity. and that we believe we have a great offering here with an oral factor DNA. So we look forward to seeing the studies start and the accrual moving, and then we'll be in a better position to make an estimate of when they might finish.

Great. Thanks. Ken, I just add it's hard to say because we just don't know what the rate of enrollment will be, right, in a competitive space in a – you know, much larger study than what we've studied so far in P&H. It's just super hard to predict. But one thing I will say is Bill's team is excellent, and their aim is to be the sponsor of choice. And this is where big doesn't necessarily help you. Small companies that pay attention, that listen, that give the extra TLC make a difference in enrollment. And so I am super confident that Bill's team will do that. Very helpful.

Thank you. Next question comes from the line of Serge Ballinger from Needham and Company. Your line is open.

Hey, good morning, and thanks for taking my questions. A few on oralizdeo. First, apologies if you covered this before. Did you disclose the number of patients that were on drug at the end of the first quarter, and I guess how many of them are patients transitioning from clinical trials or the early access programs.

Hey, Serge. Good morning. We have not disclosed the detail on that. What I can say is the number of patients on Orlodeo continues to grow every day as patients switch to Orlodeo. In Q1, what we did say is that the majority of patients by the end of the quarter were new patients switching to Orlodeo, and then the rest of them were those transitioning from our clinical trials and DAPs. and that transition program finished in Q1. So that bullet that Anthony talked about is complete, and then everything going forward is growth as patients switch to Rodeo.

Yeah, and just one point of clarification on that. The complete means that they're switched from clinical trials to quick start or patient assistance. They have to go through the same process of reimbursement like any other patient, and so some have been reimbursed, some have not.

Okay. And I think you talked about, you know, Physician base about 500, serving about 50% of the HAE patients. How big is the next set of physicians serving the other 50% that you need to address?

Serge, there are easily another 1,000-plus physicians out there, and we're reaching them as well. We're really concentrated on that top 500 just because they are, you know, they have more patients and they really know HE. So that's our priority, but we're reaching the other doctors as well, and we're getting prescribing from them too.

And, Serge, I'd add, you know, what makes this achievement in the first quarter with the sales that Charlie and his team have generated even more remarkable is they did it in COVID-19. right? And so, you know, we're already seeing things starting to open up with vaccination. That's only going to get better as the course of the year goes on.

Okay. And while we're on COVID, you know, what has been the overall impact with restrictions? Are you seeing limitations on the number of patient switches, and is that something that you expect will increase as restrictions lift?

I think, first of all, surge, as John was talking about, it's COVID limited our in-person interaction with providers. Fewer than 50% of our calls were in-person. That's going to make a big difference as we're able to do more in-person visits. And we had a great quarter despite all of this. Another piece is that oral is easy for doctors to prescribe. So it's something that many physicians have been comfortable prescribing Orlodeo in a remote environment to their patients. With more in-person visits, though, it's more opportunity, and we're excited for what's to come. Great.

Thank you. That's all the progress. Thanks, guys.

Thank you. Next question comes from the line of Maury Raycroft of Jefferies. Your line is open.

Hi. This is Kenny Chan on for Maury Raycroft. I have two questions, one on Orladeo. How's the progress on the formulary adoption versus reimbursement by medical exception. Have you encountered any pushback on the cost effectiveness from insurances? And how are the reimbursement conversations going? Are insurances looking at ISA reports? And for the second question on the P&H program, what was the FDA feedback on LDH levels? And is there a specified LDH threshold that would trigger a safety concern? Thanks.

Yes.

Thanks, Kenny. As far as the payer progress, the policy progress, as we said in our comments, it's going really well. In Q1, it was mainly medical exception that we were getting access, but several payers and PBMs put Orla Deo on formulary, and we expect a lot of acceleration of that over Q2. Cost effectiveness, no. This is the lowest price trophy on the market. and payers have reacted really well to our pricing strategy as well as the profile of the drug. And then as they see the demand coming from patients switching to Oraliveo, it's really encouraging payers to establish coverage policies quickly.

So we're very pleased with where we are. And let me stress one point I made in the prepared remarks. This drug works, right? People are switching that are controlled on profi therapy to our drug, and they're staying on our drug. So this idea... of effectiveness, this drug works. I just really want to stress that. Bill, you want to take the FDA feedback on LDH?

Sure. Can you answer the question? We do have a secondary endpoint of percentage change from baseline in LDH. There is no threshold either as an endpoint or as a safety concern for that matter. So, you know, LDH is a useful biomarker. There are You know, improvement in anemia with the change from baseline hemoglobin, hemoglobin going up, and the improvement in transfusion burden with transfusion avoidance being, of course, the most important. But, you know, the number of transfusions going down, they're the important clinical outcomes. You know, it's also worth stressing that another very important secondary endpoint is, you know, evaluation of quality of life with tools such as the FASTA fatigue scores. So measuring fatigue is important too.

And Bill, you might want to just talk about the interaction with the FDA and that it was focused on clinical benefits, right? Biomarkers are important, but clinical benefits are more important.

Right. So the regulators, of course, want to see clinical outcomes being treated as important endpoints in clinical trials. So that's why we have changed from baseline in hemoglobin as the primary endpoint and Transfusion avoidance as a key secondary endpoint, and that's a little linchpin of evaluating a treatment of anemia, after all. So, yeah, there's a whole range of interesting biomarkers. We're going to measure them. OVH is not viewed as important enough to be a primary endpoint. It's really very simple.

Thanks. Thank you. Once again, if you would like to ask a question, please press star then the number one on your telephone keypad. Next question comes from the line of Brian Abrahams of RBC Capital Markets. Your line is open.

Hey, good morning. Thanks for taking my questions and congrats as well on the early launch. My first question is on the launch. I was wondering if you could maybe parse out the pent-up demand for patients new to Orlodeo. I guess I'm wondering How long into the year might you expect first quarter's rate of switching from existing acute or prophylactic therapies to continue?

Hey, Brian, it's Charlie. Good question. And, yeah, there was pent-up demand, and we expected that. So they're always early adopters. What we're really pleased about is the demand is continuing, so we're seeing patients switch to early day literally every day. And then, as I mentioned in my remarks, There's a lot of opportunity to come as all these physicians who we've reached but haven't yet prescribed, they're telling us that they're planning to have the conversation with their patients and prescribe in the future. So a lot of opportunity to come throughout the year.

Yeah, we don't think this is just a one-quarter pop and then it's going to peter out, Brian. We expect that this is going to continue to be strong through the course of the year. And we've said it's a $500 million-plus global peak sales product, and we're even more confident in that.

Got it. That's really helpful. And then? I'm curious what sort of feedback you're getting on how real-world efficacy and safety and tolerability is comparing to the clinical trial setting. Any surprises there? And then I know it's early days, but I'm curious what you're seeing with respect to persistence and compliance for the new patients to therapy versus the rollovers from the expanded access and quick start.

Yeah, I'll take the first part, Charlie, if you could take the second. That'd be great. So I'm smiling as you ask that question because the docs and patients told us that these drugs do way better in the real world than they do in clinical trials. And so I think our clinical trial doesn't really represent the real benefit that we're seeing from patients. Megan mentioned that we're looking at the data from APEX 2 to now 96 weeks and It just keeps looking better, right? And so, you know, I'll say it again. This drug works. People are getting a real benefit. They're getting control of their disease. And, oh, by the way, they're doing it on one capsule once a day. So it's just a huge, huge benefit.

And then, Brian, your question about the experience of rollovers versus new patients, the great majority of the patients who are in our clinical trials chose to continue on Orladeo in the commercial world. because they're having such a great experience. And the early word back from patients, and we hear back from our specialty pharmacy, and we hear back through physicians, our reps, the early feedback is very strong. Patients newly switching to Orlodeo are having a great experience, as we expected. So we're pleased, and to my point earlier, we expect more patients to continue to switch to Orlodeo based on what they hear from their peers about their experience.

Great. Thanks so much.

You're welcome.

Thank you. Next question comes from the line of Desi Named of Bank of America. You're in the line. It's open.

Hi. Good morning, guys. Thanks for taking my questions. On Oradeo, as it relates to, I guess, treatment-naive patients, what is your latest market data telling you about the percentage of patients who are having KE who are are currently not on any therapy. And related to that, I'm just wondering, do you think, you know, once COVID, you know, starts to clear and more offices start to reopen, that the percentage weight of new patients or treatment I use patients that are receiving scripts will normalize more relative to what you're seeing in the early stages of the launch? And then I have a couple of follow-ups.

Yeah, I think I've got your question, but let me address it in a couple different parts. What we saw prior to the launch of Orlodeo is about 60% of patients are on prophylaxis. And so in the first quarter, we're seeing more than half of the patients coming to Orlodeo switching from those other prophy products. Most of the remainder of patients switching to Orlodeo are switching from acute-only treatments, So they may be naive to prophylaxis, but they've been treated with acute only. Our research tells us that the number of truly HAE treatment naive patients, you know, they're not on acute, not on prophy, is small. That's a small opportunity in the future, but most of these patients are treated well by their doctors. They have at least an acute therapy, and those patients are deciding to switch to prophy now that they can do it with an oral once daily option.

So this is a, I can't stress this enough, this is a switch strategy, and it's working, right? That is, if you walk away with anything today, walk away with, this is a marketplace where people are on propytherapy and acute on-demand therapy, and they're switching to an oral drug, right? So that's what's, we saw that in the market research, we saw it in the clinical trials, and now it's playing out in the marketplace, which is, Great. And it's only the first quarter. And to your point about COVID, I think there's opportunity here, right? I think, you know, access of our reps to docs has been challenging in some parts of the country. They've been really diligent and resourceful, and they've produced a great result in the first quarter. But I think as things open up more, it's going to get better. And I think the same goes for docs and patients. Right. You know, it's just been harder. It's been telemedicine. Maybe they're putting off their visit. And so I think that gets better as more people get vaccinated and more people start to go see their doctor.

OK, thanks for that color, John. And then for Japan, I know it's just very, very early in the launch. But in terms of the trajectory, would you expect it to be similar to what we would expect to see in the U.S.? ? And do you have any visibility on what pricing in Japan is?

Megan, you want to take that?

Sure, sure.

So on the trajectory, Sabine, I think as we've been sharing, Japan is a very different market than the U.S. and Europe and is a decade behind. And so we're absolutely thrilled about the opportunity that Tori has to really build and shape it. So I think our trajectory in the near term is more tempered. Also, too, Japan is in a state of emergency currently with COVID and a different rollout with the vaccine. So that may also slow that initial ramp. But as I shared in my remarks, we see this as a really strong long-term potential as Tory drives the adoption of prophy, but also the expansion of the market through more diagnosis and treatment. And then, Jeanne, to your second question, with our pricing negotiations completing last week – last month, excuse me, we netted out with a price of around $250,000 U.S. per patient per year. And for us, we were really proud and excited about that price point and the opportunity it represents for patients and for Tori. Okay. All in all, they're equally excited to now be out of the gates like the U.S. has been for the last few months, and we're excited to see what they can deliver.

Okay, thank you. And then maybe just one question, if I could, on PNH. For the two trials that you're running, I know it's difficult to, you know, take a guess on how long it's going to take to enroll, but for the naive versus the inadequate responder trial, excuse me, Would you expect both to read out at around the same time, or do you think one could enroll faster than the other?

Bill, you want to take that one? Yeah, sure. It's very difficult to say at this stage, and either of those possibilities could come to pass, right? They could read out approximately at the same time, or one could move much quicker than the other. I think it's too early to know.

Okay. Thank you.

Thanks, Susie.

Thank you. Next question comes from the line of Shana Wong of Barclays. Your line is open.

Hi, good morning. This is Swapnil on for Gina. So just one question on PNH. So can you tell us about what the size of the trials could be for this phase three and then like what specific PKPD data was looked at to go ahead with the 500 MIG-BID dosing versus 400?

Thanks for your questions. So we're going to reserve additional details about the studies for later this year, maybe at a medical meeting or something like that. So we'll be happy to share all of those details at that stage. Now, with regard to selection of the dose, the PKPD modelling uses all of the information you have, for example, on in vitro tests complement assays and things like clinical outcomes and biomarkers like LDH. This is where LDH actually is quite useful as a fairly rapidly responsive biomarker that follows the dosing. And we saw that in our disclosures through last year about how the higher doses are obviously superior to the lower doses. So I think that it's that type of information that goes into the model as well as, of course, the drug levels.

And let me just add on the size. I mean, these are rare disease trials, right? And so, you know, typically in rare disease trials, you need a couple hundred patients on the drug for a year for safety if it's a chronic therapy. And, you know, the expectation is it'll be something like that. I think we ended up, Bill, with over 300 in the HAE program when we filed. So... Okay, thank you.

And then one follow-up question. So, for the slightly higher levels that we see for LDH that was previously presented maybe was due to shorter duration of treatment and like small sample size. So, do you expect 500 meg BID dosing over a period of time to get you below that 1.5 upper limit of normal?

So that particular target is not an endpoint in either study. So, you know, I think that's the most important response to the question, in fact. So there actually is nothing magical about 1.5 times the upper limit of normal of the LDH. And, you know, LDH is certainly a useful biomarker, and we're measuring it. and it's included as a secondary endpoint. It's more relevant in the setting when you're starting out with a high LDH and you're not on C5 inhibitor therapy, but it's not as important as increasing the hemoglobin and reducing the transfusions and improving the fatigue. So, you know, specifically in answer to your question, I think what we've seen in all of the other studies of all of the other complement inhibitors, when sponsors have published individual patient data over a long period of time, you see that the LDH fluctuates. And that'll be typical in this disease. We expect to see the same thing. So, you know, you observe people for long enough, the LDH is going to fluctuate over time. But if people are not anemic and not being transfused and feeling well, then we've achieved all of the principal objectives of treatment of PNH.

Yeah, and what's most exciting is we now have, you know, agreement with the FDA that hemoglobin is the primary endpoint, you know, change from baseline, which is really exciting.

Robert, thank you for taking our questions. You're welcome.

You're welcome.

Thank you. Your final question comes from the line of Jonathan Wallaban of JMP Securities. Your line is open.

Hey, good morning, and sharing my congrats on a strong launch. Just a few for me. I'm wondering if the $10.9 million figure for Rodeo, if that's net of your royalty payment, and if there's any meaningful contribution from the ATU in France.

Yeah, so the $10.9 million is not net of the royalty payments. The royalty payments are – Just as a reminder, 8.75% of those net revenues up to 350, and then once we get over 350, it drops down to 2.75. Where that hits is, you know, below the line between operating income and net income, basically as an interest expense, John. In terms of the ATU, no, nothing meaningful.

That was all U.S. sales at 10.9%.

Great. And then just one question on the market. If you're seeing patients switch from acute, if you have any sense on the percentage of patients now of all HA patients who are on prophylaxis, and where do you think that kind of levels out in the future now with you guys on the market and you're seeing more switches over to prophylaxis?

Good question, John. So as I mentioned, what we see, we're very confident that at the time of the Orla Deo launch, about 60% of U.S. HAE patients were on prophylaxis. And so as patients also switch from acute therapy only to Orla Deo, that number is going to grow. And what physicians tell us is that in the future, that it's about 80% of patients, they expect 80% of patients to be treated with prophy. So the acute market is shrinking every day. And we expect that same kind of trend to occur in Europe after our launch there.

And it's turning out that the market research that Charlie has been doing is playing out in the marketplace.

Perfect. Well, thanks for taking the questions and congrats again.

Thanks, John.

Thanks, John.

Thank you. There are no further questions at this time. I will now turn the call back to John Stonehouse for closing remarks.

So I've done a lot of earnings calls in my 14 years at BioChrist, and I've got to say this is one of the most fun and exciting ones that I've been a part of. You know, we've got a great launch with a great product and a great team, and we're just getting started. And so it's really exciting to have a product that's generating real revenue. We have a green light to go into pivotal studies with our next program. That's an entire pipeline in a molecule. And so we're going to be starting up pivotal studies later this year. So it doesn't get a whole lot better than that. And, you know, our focus now is execution. I'm just so proud of the team and the just incredible focus. and execution that they delivered on and will continue to deliver on. So thanks for your interest in our company and have a great day.

Ladies and gentlemen, this concludes today's conference call. Thank you for joining. You may now disconnect. Have a great day.