BioCryst Pharmaceuticals, Inc.

Thank you all for standing by and welcome to the Biochrist second quarter 2021 earnings conference call. Please note that all participants will be in listen only mode until the question and answer session of today's conference. To ask a question over the phone by that time, you may press the star key followed by the number one. Please also note that today's call is being recorded. I'll now turn the call over to your host, John Bluth. Sir, you may now begin.

Thanks, Jesse. Good morning, and welcome to Biochrist's second quarter 2021 corporate update and financial results conference call. Today's press release and accompanying slides are available on our website. Participating with me today are CEO John Stonehouse, CFO Anthony Doyle, Chief Commercial Officer Charlie Geyer, Chief Medical Officer Dr. Bill Sheridan, and Chief R&D Officer Dr. Helen Thackeray. 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. I'd now like to turn the call over to John Stonehouse.

Thanks, John. As you can see in the numbers we reported today with $50 million of revenue, including $28.5 million of Orla Deo net revenue in the second quarter, the Orla Deo launch continues to go very well. We're now in the ninth month of the launch and have a consistent and growing body of evidence from the marketplace that most patients are benefiting and staying on the drug. They are switching from injectable therapies that control their disease because they're achieving the combination of disease control and reduced burden of therapy on Orladeo. The commercial team has done a fantastic job executing despite extremely challenging circumstances. with COVID limiting our ability for face-to-face interactions with our customers in the first half of the year. As you'll hear in more detail from Charlie, our launch success is a direct result of having a drug with the profile patients want, a great plan centered around patient switches, and execution of that plan by an extremely talented and experienced team. This strong start to the Orladeo launch in the U.S. and approvals and launches starting outside the U.S. to get Orladeo to patients around the world give us confidence we'll achieve sales this year of no less than $100 million and puts us on an excellent trajectory to exceed $500 million in global peak sales. A growing revenue stream from Orladeo enables us to continue to invest in our pipeline and advancing other important oral medicines for patients suffering from rare diseases. The best example of this is the BCX9930 program, where in the first half of the year we moved directly from Phase I into pivotal trials in P&H, which we'll begin enrolling later this year. Like HAE, patients with P&H tell us they want an effective therapy with a low burden of treatment. They tell us that the treatment burden with current therapies can be hours in an infusion center. We believe 9930 has the potential to offer a significant benefit to these patients, and we are thrilled that we are entering pivotal trials in this disease. Bill will share an update and our Phase III plans with you shortly. Our goal is to continue growing OrlaDale while in parallel pursuing approvals and launches of 9930 across P&H, renal complement diseases, and many other complement disorders. Biochrist has discovered and developed what is shaping up to be a very attractive pipeline of oral medicines for patients suffering from rare diseases, and we're now demonstrating our commercial rare disease capabilities as well. I'll turn the call over to Charlie to give you more details on the Orladeo launch.

Thanks, John. Quite simply, the Orladeo launch is going great, with Q2 building on our fast start in Q1. Long-term clinical data also confirm what we knew. Orladeo is a very effective drug. Data from our APEX2 trial presented at IACI in July showed that patients who started on Orladeo 150 milligrams had an 80% reduction in attacks compared to baseline after 96 weeks, with a median attack rate in most months being zero. The potential to have this outstanding level of attack control with just one pill a day is what motivates patients and prescribers. In fact, our prescriber base grew by 50% in Q2, and patient switches from injectable prophy agents and acute-only therapy continue to drive the launch. We expected prophy switches to be the largest source of business for Orladeo, and that is exactly what is happening. Sixty percent of patients starting on Orladeo in the second quarter came from other prophy therapies. Taxairo represented over 40 percent of the Q2 prophy switches, followed in order by Higarda, Synrise, and Androgens. The HAA treatment paradigm in the U.S. has moved beyond outdated classifications like mild, moderate, or severe disease. The goal of modern prophy therapy is to prevent as many attacks as possible and to reduce the impact of any breakthrough attacks. That's why 60% of HAE patients were already treated with prophy at the time of the Orlodeo launch. What patients want now is to control their attacks with the lowest possible burden of treatment. Orlodeo is also contributing to prophy market expansion as use of acute treatment continues to decline. Of the 40% of patients in Q2 who did not come from other PROFI therapies, most switched from acute-only. Some of the acute-only switchers were patients returning to PROFI after giving up on injectable products in the past. Orlodeo is also attracting a small but important population of patients new to HAE therapy. Orlodeo is transforming the HAE treatment landscape across all segments. allowing patients to prevent attacks with the lowest possible burden of treatment. Once patients switch, Orladeo is meeting their expectations. With now eight months since launch, we see patient retention trending in line with a 75% one-year retention in our APEX2 clinical trial. Importantly, we see no differences in retention related to prior treatments that patients used. Medication compliance rates are also very high, nearing what we saw in clinical trials, because very simply, patients are self-motivated to prevent attacks, and they find it easy to take a daily oral therapy. We also made significant progress with payers in Q2. Patients and physicians warned us that the hassle and uncertainty surrounding coverage for new HE medications could limit willingness to switch. As of today, the payers for approximately 70% of the HAE market already have coverage policies for Orladeo. This base, plus additional policies we expect, will allow many existing patients to transition to covered product over the rest of the year. The reassurance of broad coverage combined with a high level of service and support offered by our patient services program will also give new patients and their prescribers even more confidence to start on Orladeo. This launch is still in its early stages, and we are bullish about the future. Intent to prescribe is high across our target base, including those HA treaters who have not yet prescribed Orladeo. The gradual increase in face-to-face calls, promotional events, and medical congresses all will add momentum to the launch. For all these reasons, we are very confident that Orladeo will achieve no less than $100 million in sales this year. Launches are also underway in Japan and Germany, and our European team is preparing to launch in the UK, France, and several other markets over the next 12 months. We recently announced our regulatory filing in Israel, and we are continuing to file around the world. As I've shared with you today, the trends are strong in the Oradeo launch as we seek to transform HAE care in the United States. We believe Orlodeo also has the potential to transform HAE treatment globally, with each new market contributing to what we expect to be $500 million plus in peak sales. I'll now turn the call over to Anthony for the financials.

Thanks, Charlie. As you've just heard, the launch of Orlodeo has been going very well, especially when we consider the impact that COVID continues to have on a global basis. Orladeo continues to create real value for patients, the company, and shareholders alike, and we are confident that we have built the foundation for a strong second half of the year. 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 at $50 million. Of this, $28.5 million came from net global sales of Orladeo, and $15 million from our partner, Tori, following approval and completion of pricing negotiations in Japan. Our operating expenses, not including non-cash stock compensation for the quarter, were $72 million. We ended Q2 with $223 million in cash. This cash on hand, in addition to revenue generation and access to the additional $75 million available from Ethereum, continues to give us cash runway into 2023. Last quarter, we proactively addressed some questions that we had received, and I'd like to take the opportunity to do so again this quarter. As a reminder, we recognize revenue upon shipment from our specialty pharmacy to patients for use, no inventory or channel stocking. Strong new patient uptake and the success of our quick start in patient assistance programs continues to be the main driver of our gross to net adjustment. As we said previously, this should normalize in the 15% to 20% range as we get towards peak sales. As Charlie described, we continue to be very encouraged by the results to date. We're very confident that net revenue for Orladeo for the year will be no less than $100 million. But there are both upside opportunities that could accelerate the launch trajectory and uncertainties that could slow us down. And we need more time to see them develop and play out before providing more specific guidance. Some of these areas that we need to be cognizant of as we go into the second half of the year are, firstly, we're still early in the launch. And as such, we need more time to let steady-state monthly prescriptions and customer retention develop further. We remain encouraged by what we're seeing so far, but it's still too early to accurately forecast or guide. Secondly, as Charlie said, we've made great strides in getting Orla Deo onto policies thus far, but we still have work to do to complete this effort and transition new and existing patients to reimbursed product. Next, summer and the end-of-year holidays historically are slower periods for switches for HAE patients. More data in the next couple of months will help us ascertain if this impacts our trajectory. And lastly, there's a continuing impact due to COVID. With doctors and patient visits naturally declining due to the impact of the Delta variant, we need more time to ascertain how this might impact the launch in the coming months. We'll be watching these opportunities and uncertainties to see how they influence our launch trajectory. But as I said, based on our performance in the first half of the year, we are very confident that net revenue for Orladeo will be no less than $100 million this year. One thing that is for sure is that Orladeo is a great product that is helping patients manage their HEE with both attack reduction and the freedom that a reduced burden of treatment brings. With the potential of this treatment combined with the opportunities for BCX9930 that Bill will discuss, I'm very excited to see the progress that we'll make in the second half of the year and beyond. With that, I'll hand it over to Bill.

Thanks, Anthony. The successful launch of Oladeo is very exciting for the team at Biochrist to discover and develop this unique drug because we can see the profound impact that it is having on the lives of HAE patients. Next up in our development pipeline is BCX9930, our oral factor D inhibitor for complement-mediated diseases. At our March R&D day, we heard from a leading expert physician and a patient advocate who is living with PNH about the unmet needs of correcting anemia, relieving fatigue, and reducing red blood cell transfusions. And we also heard about their enthusiasm for our oral factor D inhibitor. BCX9930 has a great opportunity to substantially improve PNH disease control compared to the currently available intravenously infused C5 inhibitors because it can address both extravascular and intravascular hemolysis. These clinical advantages come on top of the expected dramatic reduction in vertical therapy. Based on the results of our dose-finding proof-of-concept study, we met with regulators, reached agreement on study designs, and have accelerated development of BCX9930 from Phase 1 directly into pivotal trials. Today, I'd like to share details about our pivotal trials in P&H, provide an update on our renal proof-of-concept trial, and discuss next steps in broadening our research and other indications. Our two pivotal trials of BCX9930 oral monotherapy in patients with PNH, REDEEM1 and REDEEM2, have been designed as rigorous randomized controlled trials with the goal of supporting broad labels around the world. Details of these studies can be found in the slide set on our website. For both trials, patients must be anemic and show a bone marrow response to the anemia with increased reticulocyte count. The dose of BCX9930 in both trials is 500 mg BID. REDEEM1 is a 24-week open-label randomized trial clinical trial of BCX9930 in approximately 81 PNH patients with inadequate response to C5 inhibitors. Redeemed 2 is a 12-week blinded randomized clinical trial of BCX9930 in approximately 57 patients with PNH not currently taking a complement inhibitor. In both studies after the control period, all patients received BCX9930 monotherapy through a formal week 52 safety evaluation and then roll over into a long-term extension. The primary endpoint in both trials has changed from baseline in hemoglobin with powering to detect a treatment effect of approximately two grams per deciliter. Given the much greater effect on hemoglobin that we have seen in our proof-of-concept study, we're very confident of hitting the primary endpoint in both trials. The key secondary endpoints in both trials include assessment of transfusions and fatigue, and other endpoints include additional relevant clinical laboratory and health-related quality-of-life outcomes. Importantly, the blinding and redeem-to allows us a unique opportunity to rigorously understand the impact of BCX9930 on fatigue scores and other health-related quality-of-life outcomes. Finally, patients in Radeem 2 must have a high LDH at screening, and percentage change from baseline and LDH is an additional key secondary endpoint only in that trial. Turning to our ongoing rollover study for the dose-ranging trial, patients have continued to take BCX9930 BID with average dosing duration now exceeding nine months and the longest time on drug of 17 months. The nine patients who were naive to C5 inhibitors have all continued to benefit from B69930 monotherapy with maintenance of hemoglobin responses, no red blood cell transfusions, maintenance of improvement in biomarkers of hemolysis, and PNH red blood cell clone size. All nine of these patients have continued on therapy. Turning now to the six C5 inhibitor inadequate response patients in our trial, five had high levels of C3 opsonization on PNH red blood cells at baseline, Remember, that's a marker setting up extravascular hemolysis, and all five continue to benefit from BCX9930. Recently, the investigators have decided to discontinue C5 inhibitor in four of these patients, including one patient who had required transfusions for hemolysis following COVID-19 vaccination while being treated with both Ravalizumab and BCX9930. These four patients are now continuing on BCX9930 monotherapy. Another patient with inadequate response to C5 inhibitor, who we discussed in March, had a very large transfusion burden pretrial associated with pre-existing hypersplenism and other medical conditions complicating PNH. In this patient at both lines, the proportion of PNH red blood cells that were opsonized by complement was only 0.8%, indicating that complement-mediated hemolysis was likely not a main factor in this individual's anemia. And although the rate of red cell transfusions was reduced, with BCX9930 compared to pre-study, this patient has decided to withdraw from the trial. BCX9930 has continued to be safe and well tolerated with increased duration of dosing. We've seen no safety signals with up to 17 months of exposure. Overall, the continued benefits and safety profile for our proof of concept trial patients are very encouraging and form the basis for our confidence in moving to pivotal trials in PNH. Although PNH is a competitive space for clinical trials, The enthusiasm for our pivotal program from top investigators and P&H patient advocates based on our excellent results from the proof-of-concept trial provides us confidence that these trials can be recruited. Start-up activities are now underway around the world and we expect to begin enrolling patients later this year. We are also on track to begin our proof-of-concept trial in renal complement mediated diseases by the end of the year. This will be a basket study including three cohorts of patients with C3 glomerulopathy, IGA nephropathy, or primary membranous nephropathy. Each cohort will enroll up to approximately 14 patients. The trial will collect comprehensive clinical tibia pathology and biomarker outcomes to estimate treatment effect size and facilitate endpoint selection for pivotal studies for each of these indications. Because BCX9930 inhibits factor D, thus blocking the alternative pathway, because this pathway is involved in many diseases, And because our clinical evidence confirming this mechanism of action is compelling, we plan to drive development across multiple additional indications, leading to regulatory submissions, approvals, and launches around the world. This is an exciting time, and BCX9930 truly represents a pipeline and a molecule. We are moving this program forward with all due speed, investing fully to complete development of this unique medicine as fast as possible and bring it to patients who need it. And I'd like to hand the call over to John to wrap up.

Thanks, Bill. The launch of Orla Deo is off to a fantastic start with even more success to come. We're launching our pivotal program with 9930 and P&H with more indications to follow. And our R&D team continues to advance additional molecules towards the clinic. It is an exciting time at Biochrist, an exciting time to be a Biochrist shareholder. We look forward to keeping you updated on our progress as we continue to build our company. That's it for the prepared remarks. Operator, we're now going to open it up for questions.

Thank you, speakers. Participants will now begin the question and answer session. To ask a question over the phone, you may press the star key followed by the number 1 on your telephone keypads. To withdraw your request, you may press the pound key. Again, that's star 1 to ask a question or the pound key to withdraw your request. Speakers, first questions from the line of Ken Cacciatore of Cohen and Company. Your line is now open.

Congratulations, team, on the success of the rollout. It's just fantastic to see. Just wondering if you could give us some commentary around the pacing of patient starts through the quarter so we can try to get an understanding of where we were exiting. And just to confirm, I believe you said roughly 70% of patients were paid drug at this point. I just want to make sure we can confirm that and understandably good nuance about no less than 100 million through the balance of the year and all good reasons. I guess I was just wondering about this initial start and as we think about pacing of patients in terms of how they see the clinician through the balance of the year. So are there normally on average two patient visits or one patient visit? Just trying to understand your ability to capture how many kind of bites of the apple you get to convert patients. So just kind of any nuance on how these patients typically present themselves. So the clinicians and then also maybe just early commentary about Europe. I know it's early in Germany, but any nuance around what we're seeing there so far. Thanks so much.

Charlie, I'll take the last two. You can take the first two.

Thanks, Ken. So on the pacing of new patient starts since launch, it's been really strong and consistent right from the beginning, month over month. And so I think that's part of a reflection of the 50% increase in prescribers that we've seen, so very strong. You were asking about the coverage. What we said today is that 70% of prescribers Payers now have coverage policies established. In Q2, the majority of our patients were already receiving reimbursed product, but as both Anthony and I said, we'll have some of our existing patients now with the new coverage policies rolling over to paid product in the second half of the year.

And then, Ken, with regard to the no less than 100 million and the pacing and clinic visits, I mean, you're directionally right in terms of, you know, roughly two visits per year. But I think Charlie and Anthony did a really good job of telling you the things that could go, you know, very positively that could increase, you know, beyond the 100 million and those things that would keep us closer to the 100 million target. the uncertainties that, you know, like the summer months, we just, this is the first July and August that we have of launching this drug. So we just want to see that play out before we give more finite guidance. And then on Europe, as Charlie said in his prepared remarks, you know, you should expect that the uptake is different than in the U.S., that the ramp is slower. Germany, you know, the launch is underway. They had some pretty heavy COVID restrictions that They just released, I think, in July. Now with the Delta variant, I'm not sure that they're going to put those restrictions back to limit patients coming into the universities and clinics and the like. So we just got to see how that plays out over time. You know, I think those will be bigger contributors next year. And as Charlie said in his prepared remarks, you know, we'll be seeing additional countries launching as we get pricing agreements. Thanks so much.

Welcome. Next question is from the line of Brian Cheng of Cantor Fitzgerald. Your line is now open.

Good morning, team. Congrats on another great quarter, and thanks for taking my question. So you're seeing patients adopting and switching from both prophy and on-demand options to Arladeo. We're just curious how you're thinking about the on-demand versus prophy use or checkout in the next two years. And can you comment on how the patient access through medical exception versus formula reach has changed this quarter versus last quarter? And I have a quick follow-up. Thanks.

Charlie, I'll take the first one. You take the second. So, Brian, with regard to pro-fee and on-demand market, it's shrinking every day. And it's not just us that are shrinking it. Takeda, CSL, with their prophylactic therapy. So honestly, you know, we said 80-20 ultimately when it settles out. It could be 90-10 just given how, you know, patients really, I think they always wanted prophylactic therapy. They want to prevent attacks. And now that there's an oral option, you know, we're just seeing a lot of enthusiasm.

Yeah. And then, Brian, on your question about the medical exception trend, We had a lot of success in the first half that we've talked about before, getting patients covered via medical exception. What's great now with 70% of the market having access to Orlodeo coverage is that, as I said in my remarks, that gives patients and prescribers a lot of confidence coming in. And what it's going to mean is that for new patients coming onto product, they're going to start getting to paid product a lot faster, a lot sooner in the process. So we still pursue medical exceptions when needed. We still have successes there. But increasingly, coverage will be through formal coverage policies.

Okay. And related to 9930 and P&H, I'm just curious if you can tell us the rationale behind the difference in the primary endpoint for redeem one versus redeem two. And then will there be a change in LDH included as a part of the secondary endpoints in the redeemed ones? Thank you for taking my question.

Sure. The primary endpoint in both studies is the same. It's changed from baseline and hemoglobin. The powering ability of what you can detect is a little bit different because of the difference in sample size between the two studies. And quite frankly, we're very confident of exceeding what we've put in for the power in terms of approximately two grams change in baseline hemoglobin based on the proof-of-concept results. Remember, these studies also have to provide a safety database. So we could have had a smaller sample size in REDEEM-1 perfectly easily with a slightly different you know, hemoglobin target for powering purposes. But, you know, we need the additional subjects for safety for NADA. And do you mind just repeating your second question?

Regarding LDH change, whether that will be included as a part of the REDEEM-1 study?

No, it won't. So I think that, you know, the issue – For most patients who have an inadequate response to C5 inhibitors, you know, is extravascular hemolysis. And LDH is really a biomarker of intravascular hemolysis. So, you know, we measure all the biomarkers, but it's not a key secondary endpoint in redeem one. Got it. Thank you.

Next question is from the line of Lisa Baiko of Evercore ISI. Your line is now open.

Hi, guys. Great quarter, and thanks for taking the question. Can you maybe provide a little more color on what kind of gross to nets you're seeing at this point? I know you said the majority of patients in the second quarter were receiving a reimbursed drug, but kind of what does that mean as we think about gross to net adjustments?

Yeah, thanks, Lisa. So, you know, they continue to improve. Quarter and quarter. So as more patients move over from free product onto reimbursed, and as Charlie said, as more new patients come directly onto or quicker onto reimbursed products, we've absolutely seen them get better quarter over quarter. We're not going to give specific details therein, but what we did say was we still feel really strongly about that idea that we're going to get to 15% or 20% in line with other small molecules as we approach peak sales. I'm honestly really happy with the way things are playing out from a gross to net.

Okay. I guess were you at Were you at the majority last quarter? Just kind of thinking about how things have evolved.

The majority paid? Is that what you're asking?

Yeah. In Q1, Lisa, the majority were on free product. In Q2, the majority were paid. So the trend is this.

Got it. Okay. Thank you. And then in terms of compliance persistence, I realize that's kind of a you know, an unknown factor, you know, for the future. But can you maybe tell us what you're seeing so far in these first sort of six months since launch? What kind of compliance persistence are you seeing?

Charlie, you might want to just reference what we saw in the clinical trial and then how it relates to that.

Yeah. So, Lisa, in APEX2, we saw 75% one-year compliance. patient retention. And what we're seeing so far, eight months into the launch, is we're trending within that. So the patient retention is really good. And I think a big part of this is a reflection of this drug works really well. And the data we presented at IACI with 80% reduction in attacks versus baseline shows that patients do really well on this drug. And then as far as just compliance, I mentioned it's been very high close to our clinical trials rate, which were in the 90% range. It was high 90s. It was high 90s in clinical trials, and I think that's just a reflection of patients know that when they take one pill a day, it's easy, and it's going to help them prevent attacks, so they're self-motivated to do so.

Okay, great. And turning now to oral factor D, I'm kind of really interested in this basket study that you're doing of kind of a renal complement diseases. Can you talk about, you know, how you were thinking about that study? I'm assuming proteinuria is going to be the endpoint. When would you measure that? And, like, is that kind of important across all these diseases? And what sort of levels, you know, do you think you need to reduce to be competitive? Maybe just give us a little more color and higher things like that. That's a good approach. Thanks.

Yeah, hey, Bill, maybe focus on the quality of selecting patients that really truly have the disease, what we're doing to make sure that we have that, and then clarity around the endpoints.

Right. So we've, I think in previous calls, we've mentioned that we've had fantastic discussions with external nephrology experts in a series of meetings to help us think about all of these questions. And what's really critical is, is making sure that we have patients who have active disease in the first place and not burnt out disease. So that's why there's, as I mentioned on the call, we'll be doing kidney pathology. So there'll be a baseline and a follow-up biopsy to assess that. That's very important. And we'll be doing, you know, very well standardized and comprehensive assessments of the kidney pathology and the role of the complement system in each of these diseases. That's number one. In a proof of concept study like this, I don't like the idea of a single endpoint. I like to measure everything, right? So we're measuring everything. We're measuring a whole suite of biomarkers. You're absolutely correct that proteinuria is a very attractive endpoint. And by the way, in the FDA's initiative with industry and academia, around this whole topic of endpoints in kidney diseases, the combination of reduction in proteinuria and stabilization of the mineral filtration rate is the direction that the field is headed, quite independently of C3 glomerulopathy or complement-mediated diseases. So that'll be a discussion with regulators after we've got the proof-of-concept results in terms of choice of primary endpoint for a pivotal study. And each disease is separate, but I think that the existing evidence out there on the effect of complement inhibitors, for example, in C3 glomerulopathy makes it pretty clear that you can see benefits pretty quickly in people with active disease.

Lisa, the other thing I'd point out is we've gone from a study where we were phase one looking at PNH patients to, you know, in the second half of the year, we're going to be in pivotal studies in P&H patients and then three more indications in renal disease. So four indications we're going to be pursuing by the end of the year, which is very, very exciting for us.

Okay. Great. Thank you.

Thank you.

Next question is from the line of Jessica Fye of JP Morgan. Your line is now open.

Good morning, congrats on the quarter. First, not sure if I missed this, but the 28.5 million of Orlodea sales, you just break out what if any contribution came from Europe, or basically anything, you know, x us x Japan and that number. And then is there any way we should think about how much of a tailwind you might see in the back half from gross to net due to improving coverage and less free drug?

Yeah, thanks, Jess. The best way to think about the 28.5 is the vast majority, almost all of it came from the U.S. You know, John said Europe had just kicked off, Germany kicked off in June, Japan in Q2, so I think they'll be more valuable in terms of revenue generation in 2022. So, sorry, for Q2 and then for this year, the majority of the revenue is going to come from the U.S. In terms of the growth to nets, in the second half of the year, I'd say the trend will continue, right? As we continue to get more and more patients on, and as Charlie said, we continue to get more payer coverage, I would expect that the gross-to-nets themselves will tighten. Now, as we move off medical exception and onto reimbursed via coverage, there will be some adjustment, but it will be overweighted by new patients coming on and then the transition of existing patients onto that reimbursed product. So my expectation is that through the rest of the year, the gross-to-net will continue to lower.

Okay, great. I think you mentioned that patient retention is 75%, like, similar to the trial. Can you help us better understand the time course over which patients figure out if they're going to stay on drugs? Does this happen early on, or is it more kind of steady over time?

Yeah, just the – what we said is we're trending toward that 75% for one year. So typically, you know, patients make that decision in the first few months, That's what we saw in clinical trials and that's what we're seeing in the real world.

And the other thing I'd say, Jess, is, you know, this IACI data that we have where you see patients doing better over time. You know, one of the things that we're really encouraging is that patients really give it a fair shot to get the full benefit, right? So, you know, as Charlie said, it was an 80% reduction from baseline over 96 weeks, which is incredibly, you know, effective. And so patients need to give time to get to that point.

Great. Thank you.

Next question is from the line of Serge Belanger of Needham and Company. Your line is now open.

Hi, good morning, and thanks for taking my questions. Congrats on the progress. First question on Orlodeo. I know you haven't disclosed the number of patients on drug, but can you give us an idea of how many new patients started Orlodeo therapy in the second quarter?

So, you're right, Serge. We haven't commented on the specific number. What I can say is, again, the demand has been strong and consistent, and new patients are now the great majority of our patient base since launch. And then we also continue to expand our prescriber base. So, We had 50% more prescribers in Q2 than we did in Q1, and that trend continues. So we have a lot of growth in front of us.

Yeah, and, Serge, if this question is around, you know, is this a bolus or, you know, just a point in time, it is very – if we leave you with anything, it's a very consistent growth, very consistent.

Got it. Okay. And then for Charlie – You mentioned that 70% of HA patients now are on a reimbursement policy. Can you maybe talk about how that policy compares to coverage of other products and when you expect the remaining 30% piece?

Oh, thanks for the good question, Serge. So all of the policies established thus far are at parity with other pro-fee products. So that's our strategy. We want to make sure that patients and their prescribers can make the treatment choice, and I think it's a reflection of how well payers are receiving Orla Dale. We're not going to stop at 70%, and we're actually having really good continuing discussions with additional payers, so we expect that number to go up, and coverage will be even stronger by the end of the year.

Okay. And let me squeeze in one last one for Anthony. I know you're not providing OPEX guidance, but can you give us some maybe directional color for the second half after both R&D and SGA saw some ramp up in the second quarter? So how should we think about the second half for those line items?

So I think, Anthony, just focus on kind of where are we making the investments. Yeah.

So, no, so there's a good question, and we continue to invest in the rollout of Orlodeo on a global basis. We've talked about the launch going well in the U.S. We've talked about expansion into Europe and then markets beyond that, so we'll continue to invest in the commercial side of the house. And then Bill talked about BTX 9930, which is, you know, a really big deal for us in terms of both the pivotals and then the proof of concepts that we have. So we will continue to invest in those areas. You know, and so if I look at where we are at the moment, can you take that as a run rate and expect additional investment? Yeah, I mean, there's value to be unlocked and created in those areas, and we will continue to invest as long as it makes sense for it to create that value. Great. Thank you.

Thanks, Serge.

Next question is from the line of Tazin Ahmad of Bank of America. Your line is now open.

Hi, guys. Good morning. Thanks for taking my question and congratulations from me as well on a really spectacular quarter. I just wanted to get a little bit of color. So you've been really thoughtful about providing your sense about how the rest of the year could look with at least 100 million in sales projected and some caveats to that. But I wanted to just maybe get a little bit of color on a couple of those caveats, namely summer vacation schedules and COVID. So as we kind of enter the middle of August, I'm just wondering how those two factors are trending so far this quarter relative to how you exited 2Q and then have a couple of follow-ups.

So good questions, Dazeen. And as John said, this is our first summer. And yeah, people are going on vacation, doctors and patients. And so that's something we're watching. But demand has been consistent and strong thus far. As far as COVID, we were able to, you know, we launched in COVID. We've been prepared for this. We've done well throughout COVID. The team, our sales team, was able to make more in-person calls in Q2. And, you know, that makes a difference. But they're prepared for anything that comes. So we're watching it. But with the Delta variant, it's something that could affect things in the rest of the year, just in terms of slowing in-person medical meetings, et cetera. But we're very confident in our $100 million, no less than $100 million for the year.

Yeah, and I would just add to that, Tazine, if the lockdown, you know, if there's less face-to-face stuff, right, like medical meetings, you know, we're hoping that the college meeting or is it the college? Yeah, the college meeting in the fall. in November is face-to-face, and we've heard that attendance will be fantastic. But if that doesn't happen and it's virtual again, that's a missed opportunity. You know, getting patients together, getting physicians together face-to-face is an opportunity. If COVID prevents that from happening, that will be a missed opportunity. But we're very, very confident that no less than $100 million for the year.

Okay. Thanks for that, John. And, you know, maybe another question on COVID. Is there any impact that you're seeing geography-wise on uptake? So I guess we are to believe the reports that we see that cases are surging in highly populated states like Texas, Florida, California. Are you seeing any kind of correlation between the higher rates of Delta in those states and your ability to get traction there?

What we've seen throughout the year is the kind of how COVID's is what's the prevalence of COVID and what are the local policies affect our ability to do face-to-face? But we're not seeing any trends in terms of patient uptake that we could redirect it to COVID.

Texas is a great example. The state doesn't require masks, but the city of Austin requires masks, right? So there's just high, high variability, even within a state.

Okay, thanks. And then the last question for me is maybe on the P&H markets. So there was a recent approval from the Pellis for their T3 inhibitor. As you think about how this market is evolving, does that change the way you think about the market in any way and how your drug could be positioned there?

Yeah, I think the really simple answer is, you know, we've got a twice-a-day oral drug, and that is, Charlie, remind me, every three or four days.

Twice a week, 24 hours. milliliters per injection.

Yeah. So from a burden of therapy to zine. And if we've learned anything in HAE, it's about controlled disease and it's about reduced burden of therapy. And that combo gives patients a real opportunity to have a treatment regime that they've been dreaming about. So I think we could be very competitive with all injectables.

Okay. Thanks, John.

You're welcome. Next question is from the line of John Wollobin of JPM Securities. Your line is now open.

Hey, good morning, and thanks for taking the questions, and congrats on the progress. A couple on Orlodeo. You mentioned that there's 50% new prescribers. Can you tell us how many prescribers you have now and how your targeting approach has been going? And if you have any color on kind of the average number of patients per prescriber that are on Orladeo?

Good questions, John. So what I've said before is our number one tier of targets is about 500 doctors that treat about 50% of existing HAE patients. And we've made great progress, great penetration into that group, but still the majority of them have not prescribed. but the intent to prescribe is really high amongst them. So we have a lot of opportunity there that we're very bullish about. And then we've made a lot of progress into the next tier of our prescriber list. What I'll say about the number of patients per doctor, we've had prescribers who have prescribed for multiple patients with Guarulhadeo, and that's the goal. We want to go broad across the prescriber base and then deep within the prescribers. But, you know, the average doctor is still getting started with Orlodeo at this point, so we expect a lot more of those multiple prescribers in the future.

Yeah, and all of that leads to upside, John, at the end of the day, right, that, you know, doctors who maybe put one patient on, you know, have a good experience and start to put more on over the course of the rest of the year.

That's helpful. And maybe one or two on 9930. Can you comment on how you're thinking about enrollment timing for both redeem one and redeem two? And given that we're starting at a higher dose versus what you did in the proof of concept, do you expect any difference in outcomes or responses without the titration that you did earlier?

Thanks. So, Bill, you might want to clarify that dosing first because we did have 500 in that study here.

Yeah, so we had several cohorts of different dose levels in the proven concept, and we had individual intra-patient dose escalation too. But we've had plenty of experience in the range of 500 milligrams twice a day and also at 400 milligrams twice a day. We chose to go with the higher dose. There were no safety differences. We haven't had any safety signals. So 500 milligrams twice a day, very comfortable, and we expect to see very good responses at that dose. With regard to the enrollment, until we've really started enrolling, it's sort of hard to predict in rare diseases how you're going to go. And we learned that in the HAE programs that we did. So how do we cope with uncertainty about that? What we do is select terrific sites all around the world and cast a broad net. And that's the way we approach it. So as I mentioned in my remarks, You know, we've had fantastic interactions with leading hematologists and with patient advocates about the data that we shared in March. They're very enthusiastic about testing this drug for all of the reasons that I mentioned to improve patient care. And the fact that it's an oral medicine is a big deal. So it's really hard to predict. And so, you know, we look forward to having the studies start up and seeing how the enrollment goes and then we'll be in a better position.

Yeah, John, I'd add, too, that, you know, with the Appellus drug on the market in the U.S. and other competing studies going on, and it's a rare disease, you know, it's challenging. But one thing that I'll say, and Bill and Helen won't brag about this, but they should, which is their teams work to be sponsor of choice. So the relationships that they build, you know, with the study coordinators, with the site staff, with the site P.I., is the best, honestly. And so that makes a difference in terms of enthusiasm for working with us.

Got it. Thanks, and congrats again on the great quarter.

Thanks, John.

Next question is from the line of Maury Raycroft of Jefferies. Your line is now open.

Hi, good morning, everyone, and I'll add my congrats on the quarter. For Orlodeo, what is the latest update on real-world efficacy you're seeing compared to the Phase 3 studies? And do you have a way to collect some of the real-world data to potentially publish it at some point for reference? I guess, what's your plans there? And I know you're not providing a lot of specifics, but can you provide any more perspective into script renewal that you're seeing at this point? Do you want to take that?

Yeah. So, somewhere, as I mentioned on the call, you know, the 80% reduction in attacks over 96 weeks shows that this drug really works over the long term. And so real world, that's what we're hearing. Patients are doing really well on this drug, regardless of whether they're coming from other prophy products, which is 60% of our patients, or switching from acute only, which is most of the other 40%. Yeah, we do plan, you know, we're going to keep looking not only at our long-term clinical data, but also additional real-world data from the U.S. and around the world, and you can expect us to look to publish things in the future. And then as far as, I think you were asking just a script renewal, yeah, so compliance rate. What we saw in our clinical trials was really high compliance, high 90%. and we're seeing very close to that in the real world, and that's a reflection of this drug works. Patients know what it does, and it's really easy to take one pill a day, and they're being very compliant.

Got it. That's helpful. And then for the PNH study, just wondering if you can provide any more specifics into when the four patients on 9930 discontinued C5 and any more perspective into the one patient that remains on C5 combo.

Bill, you want to take that?

Sure. I think that, as we've mentioned in previous calls, the decision to move to discontinue the C5 inhibitor in each individual patient is made by the site investigator. And if you look at the existing evidence from the Factor B inhibitor program, from another sponsor, it took many, many months. And they reported data out to a year and still three of the ten patients hadn't been switched to monotherapy by that time. So we're not in any hurry here. We don't need the data for any particular reason right now. We're moving ahead with our physical studies. And as I mentioned in my remarks, these the discontinuations of the C5 inhibitor in the poor patients where investigators have made that decision already was recent. So, you know, in PNH you'd like to see the data mature over time. So it was very recent. The other part of your question was about the individual hasn't switched yet. Just like in the other study, it's just a matter of time for the investigator to make the decision, I think.

Got it. Okay. That's very helpful. Thanks for taking my questions. Thanks, Mark.

Next question is from the line of Brian Abrams of RBC Capital Markets. Your line is now open.

Hi, this is Steve. I'm from Brian. Thanks for taking our question, and congrats again on the quarter. So looking through this week's FDA adverse event report, it looks like there are a few GI events for Orladeo that were reported. And can you comment on any feedback you've received from physicians on any reports of dose reduction due to GI issues? Thanks.

Yeah, I'll take that one, Steve, and maybe, Bill, if you need to add any color to it. I mean, that's a known adverse event that's in our package, circular, and we've seen it in the clinical trials. It's mild. It typically goes away fairly quickly, and we've had 75% retention. You know, I think in the clinical study, I'm not even sure if we had a dropout, maybe one dropout. due to GI adverse events. So, so anyway, you know, we're, you know, nine months into the launch and it's absolutely meeting our expectations in terms of, you know, what we're seeing. And then, you know, I think the other thing that's really important is, you know, our sales people making sure that they're setting expectations with the physician to counsel the patient properly. And then our patient services group also working very carefully because really when you think about it, if you have the opportunity to, to not really have any tolerability issues and be well controlled on the drug if you give it enough time and it's a once a day oral, why wouldn't you try, right? And so that's the key to this. And so far, so good.

John, we're hearing that the patients are really happy on this drug.

I would just add to what we're seeing in the FDA FAS database, for example, is totally consistent with our labeled adverse event description, we have a safe and effective drug.

Great. Thanks.

Last question is from the line of Chris Raymond of Piper Sandler. Your line is now open.

Good morning. This is Nicole Gabreski on for Chris. Congrats on the quarter and thanks for squeezing us in. So I guess just two quick ones on Orladeo, kind of just going back to patient retention. I know you just commented on the AEs, but I guess just with more time on the market, I guess what's been the most common driver of discontinuation so far? Has it been response or tolerability-related issues or access or potentially something else? And then just the second one, Can you just remind us how active the HAE patient community is? You know, just trying to gauge how much word of mouth as initial patients have had success on oral ADO will lead to future patient growth and switching. Just wondering if you have any feedback there. Thanks.

Yeah, Charlie, you want to take that second one first?

Sure. You know, as far as the active HAE community, In the U.S., this is a really active community, very well organized, a lot of communication between patients, and we see that as a big opportunity. What patients have not been able to do thus far just because of COVID is have in-person meetings. And so as John was talking about earlier, some of that becomes a missed opportunity, but we expect word of mouth is really going to start to become very strong as patients talk to each other and as more and more patients get have a good experience with Orlodeo.

Yeah, and on the discontinuations, let me just stress first that, as Charlie has said at least three times today, we're within the range of what we saw in the clinical trial, so 75% or greater are staying on our drugs, so the discontinuation rate is pretty low. And the mix is all over the board, right, that it can be adverse events. No drug works in everybody, so it could be lack of efficacy in some, but it's a mix. It's a really broad mix.

Okay, thanks, that's very helpful.

Thank you, participants. I'll now turn the call over to John Stonehouse for final remarks.

Great. Let me wrap up the call with a huge, huge thank you to all of our employees. I mean, the commitment that they've shown to be able to discover, develop, and now bring to market innovative drugs for patients suffering from rare diseases is absolutely amazing to me. And they do it with a sense of urgency. They know that patients are waiting. So thank you so much to all the employees of Biochrista. And thanks to our shareholders, for those of you in particular that have stuck with us. We're really excited about the future of the company. I hope you are, too. And we look forward to keeping you updated as the rest of the year unfolds. Thanks, and have a great day.

And that concludes today's conference. Thank you all for joining. You may now disconnect.