BioCryst Pharmaceuticals, Inc.

Good day, everyone, and thank you for standing by. Welcome to the Biochrist fourth quarter 2021 earnings call. At this time, all participants are in a listen-only mode. Following management's prepared remarks, we will host a question-answer session, and our instructions will be given at that time. If during your conference today you do require operator assistance, please press star then zero, and an operator will be happy to assist you. As a reminder, this conference call is being recorded. It is now my pleasure to hand the conference over to Mr. John Bluth with Biochrist. Please proceed.

Thanks, Brian. Good morning and welcome to BioCHRIS fourth 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, 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. 2021 was a great success for Biochris as we took a big step forward toward our goal of building the next great biotech company. The launch of our first oral drug for rare disease patients suffering from HAE or Ladeo got off to a tremendous start. with $122.6 million of net revenue in the first year, we have a solid base to build off. That led us to confidently guide you to no less than $250 million this year and $1 billion in global peak sales. Patients want an oral therapy, and we are on our way to becoming the market leader in the prophylactic treatment of HAE. But oral adeo is just the beginning. In 2021, we also advanced our pipeline that will lead to significant additional value creation. Our oral factor D inhibitor, B69930, moved from a phase one in one indication to pivotal studies in P and H and a proof of concept study in three renal indications. What's important to note here is not only do we have a late stage program on the heels of the approval and launch of oral adeo, but this molecule has the potential to be an entire pipeline. Imagine having filings for major approvals, additional pivotal programs, and many proof-of-concept studies in many different rare diseases. That's what we have with 9930, and we're allocating our capital into this program to compound value for years to come. And finally, late last year, we brought in significant additional capital that gives us the ability to retain the rights of these programs and create greater value for our shareholders. So 2022 is another year focused on executing our plan, continuing to grow Orladeo in the U.S. and around the world, and advancing our pipeline, enrolling pivotal and proof-of-concept studies, all to increase in compound value. It is an exciting time at Biochrist. Now I'll turn the call over to Charlie for more details on the Orladeo launch.

Thanks, John. The great results from 2021 give us confidence in our guidance of more than doubling sales in 2022. We already have a sizable base of patients entering the year, and recent market research shows that physicians expect to double Orladeo use among their current HAE patients over the next 12 months. The 60 physicians in this survey are representative of the market, treating about seven patients each, and they expect Orladeo to become the market leader. This survey is different from the type of research we presented before launch because physicians are now reflecting on real-world clinical experience rather than reacting to a written product profile. That real-world experience means their current expectations are likely to be more accurate in predicting future market share. This recent research also matches the trends we are seeing in the detailed data on prescriptions, patient demographics, and retention that we get from our specialty pharmacy partner. We saw strong and consistent new patient starts in each quarter of 2021, matched by a consistently expanding and deepening prescriber base. The source of patients was also consistent in each quarter of last year, with more than half switching from other profi therapies, mostly injectable therapies like Taxairo and Higarda. And patients are staying on Orladeo at high rates regardless of their prior therapy. We ended 2021 with an overall patient retention rate of 70%, with patients switching from injectable prophy having particularly strong retention. For example, of the patients where we have enough history to track, nearly 80% of TaxIRO patients remained on therapy for at least six months. This level of retention shows Orlodeo is well for most patients, which is consistent with switching data from our APEX-S study that we presented in November at the college meeting. We also entered 2022 with broad coverage for Orlodeo. All major payers and PBMs now have policies, which means that at least 80% of the HAE population in the U.S. has access to Orlodeo coverage. The strong underlying fundamentals give us confidence that sales will be no less than $250 million for the year, with Q1 being the outlier in quarter-to-quarter growth. We expect little to no Q1 revenue growth over Q4. There are three reasons for this, all of which you would expect with a specialty drug, and were built into our 2022 guidance. Many plans require reauthorization at the start of the year for specialty products like Orlodeo, meaning some patients will temporarily shift to free product. Second, the impact of commercial copay assistance and Medicare Part D cost sharing will reduce average selling price in the quarter. And finally, our last major PBM contract went into effect in January, but most of the revenue benefits will be realized in future quarters as participating plans implement the policy and existing patients shift from free product to paid product. Based on the strong 2021 results, the favorable patient trends, positive HAE treater reactions, we expect Orladeo to reach $1 billion in peak global sales. The math to get there is both simple and achievable. Between 25% and 30% market share among diagnosed and treated HAE patients in the U.S. gets us to 2,000 patients, and up to $800 million in sales, assuming a 15% to 20% gross to net adjustment. The U.S. will again account for the great majority of sales this year, but Orlodeo is already launched in seven other countries, and we expect several more regulatory approvals and launches this year. By the time we reach peak annual sales, we expect the rest of the world will account for at least $200 million annually. As we see more and more clinical trial and real-world evidence of how well Orladeo works for most patients, as we see we are helping patients get access to treatment, as we see how much need there is for an oral, once-daily therapy around the world, our goal is to get all HAE patients and their doctors asking, why wouldn't you try Orladeo? Helen, I'll pass it over to you.

That's absolutely right, Charlie. We've got more abstracts at Quad AI this weekend, sharing the continuing evidence coming in for how Orlodeo helps patients. That effect is durable. What we're seeing is that patients staying on Orlodeo respond really well. They have fewer attacks, they feel better, and their quality of life improves. We see this in the real-world evidence of the 96-week data set from both APEX-2, the pivotal study, and APEX-S, the long-term study. That 86% reduction in attack rates and baseline observed in the long-term treatment group is an example of this significant and durable effect with a once-daily oral medicine. It's exciting to see the difference Orladeo is making in the lives of HAE patients. Now I'd like to turn to what's next for us. Our pipeline is advancing rapidly, and we're preparing for the steps to come. This is such an exciting and busy time for us, The lead molecule in our pipeline is, of course, BCX9930, our oral twice-daily factor D inhibitor, which is being evaluated for the treatment of PNH in two global Pivotal trials. These trials are enrolling, even as we are expanding to more countries and sites to reach full swing. The Pivotal program is proceeding very well. What comes next, and we are starting to prepare for this, is filing for registration with the Pivotal dataset. we expect to be pursuing registration in multiple countries. And one strength of our program is the robust, controlled data that the trials are designed to provide in both patients naive to prior therapy and those with an inadequate response to C5 inhibitors. This broad, controlled data set is designed to give us information on not only the key outcomes, such as our primary endpoint of change from baseline hemoglobin and our secondary endpoint of transfusion rate, but also the patient reported outcomes such as the facet fatigue score. We anticipate this information may be highly supportive of moving to registration in the US, Europe, and other regions. Remember, that was the case with Orlodeo. We went through the registration process in three regions simultaneously with a single pivotal data set. With BCX9930, we expect to be in a position to move broadly in this program as well, to register in the US and beyond with this pivotal data. So when we talk about our goals for the factor D inhibitor in PNH, we are talking about enrolling these pivotal trials, achieving the top line of readout in both, and initiating work towards submitting for global registrations. And that's where we plan to be by the end of 2023. In parallel, a basket study of nephritis indications is also open and screening patients in multiple countries. There remains a clear need for better therapies to improve outcomes in these three indications, C3 glomerulopathy, IgA nephropathy, and primary membranous nephropathy. It's also clear that complement alternative pathway dysregulation has a crucial role in these diseases, making them logical indications to pursue next in our factor D inhibitor program. And yesterday, we announced the enrollment of the first patient in that study, which is a big step forward as well. As a reminder, this study will enroll up to 14 individuals in each of these diseases to confirm proof of concept. Depending on the size of the effect seen, we may not need that many patients to have confidence in proceeding into a pivotal trial. So what we are preparing for is that we enroll these patients and at some point, perhaps with fewer than 14 patients in a cohort, we achieve that confidence and move forward to pivotal trials for each disease one at a time. We anticipate we'll be rolling out three pivotal trials in these three diseases by the end of 2023 as well. These may each advance at a different pace, and because they are not dependent on each other to progress to pivotal stage, the pivotal trials can proceed as each one gets to proof of concept. And this is just the start. There are multiple other diseases where the alternative pathway of complement is crucial to the pathophysiology of the disease, and where proximal inhibition of the alternative pathway with a potent and specific factor D inhibitor could be expected to improve clinical outcomes for patients. We are preparing to add indications in the clinic to the ones we're evaluating in trials so far. So you can expect there will be other studies in preparation, building on what we already know, to assess our oral factor D inhibitor for treatment of a number of these other diseases. Think of it as a second wave of studies coming behind what you see now. Another way to think about it is like this. We completed the pivotal trial, the global registration, and then the launch and global expansion for Orlodeo. Now we have two pivotal studies in PNH with our next pipeline molecule and a proof of concept trial and three more renal indications. By the end of 2023, we plan to be moving towards submitting for registration for PNH. We anticipate having additional pivotal trials getting underway in the three renal indications. And we expect to have proof-of-concept trials advancing in a whole new set of indications. This is the pipeline in a molecule that is our factor D inhibitor program with BCX9930. We're investing in the trials and the planning for this factor D inhibitor program, as I've mentioned here. And we're also investing in the rest of our pipeline, including our FOP program with the ALT2 inhibitor, BCX9250, our third molecule and program currently in the clinic and moving along. And our pipeline is really strong. There is more waiting to be unveiled from our discovery center in Birmingham. Beyond the progress we're making in the clinic with the molecules I've discussed today, and in the meantime, our discovery team is continuing to identify and develop new molecules for additional targets. There is so much more to come. With the revenue from Orla Dale and with capital, we are investing. building our programs and expanding our pipeline to bring multiple medications to patients and an increasing set of diseases. This is expansion. This is bringing our ability to develop and deliver drugs to patients to a whole new level. I hope you can hear in my voice, I'm excited with what we're doing now and with what's ahead of us. We are very focused on advancing new ways of reducing the burden of disease for patients. And I'm proud of the work our teams are doing to drive our pipeline forward with both the programs in the clinic and the programs still to come. I'll now turn the call to Anthony.

Thanks, Ellen. Our capital allocation strategy has always been to invest in those areas that can provide significant long-term value. We did it with Orlodeo, investing early off the back of very robust market research, and we firmly believe that this early investment has been a key factor in our early success. With the Factor D program, given what you just heard from Helen, there's even greater potential given the multiple indications that we could go into with this pipeline and a molecule. You can find our detailed fourth quarter financials in today's earnings press release, and I'd like to call your attention to a few items. Revenue for the quarter was $47.2 million, of which $46.2 million came from net sales of Orladeo. Operating expenses not including non-cash stock compensation for the quarter was $90.8 million. And earnings per share for the quarter was negative 10 cents for Q4. This was impacted by a positive one-time non-cash adjustment of $56 million related to the extinguishment of the non-recourse pharma notes. Excluding this adjustment, on a non-GAAP basis, our operational EPS was negative 40 cents for the quarter. Following the royalty and equity deals that we secured with RP and OMERS in Q4, we ended the year with about $518 million in cash on hand. And as we previously described, we have also agreed with Ethereum to draw down the additional $75 million debt tranche mid-year this year. Additionally, we have Orlodea revenue growing from $122.6 million last year to no less than $250 million this year and onward to a peak of $1 billion. For operating expenses, we're providing a range of $440 to $480 million for full year 2022. Having exited Q4 of 21 with a quarterly OPEX run rate of around $91 million, the great majority of the additional investment is allocated to the progression of our Factor D program. Helen clearly articulated what this investment will get us between now and the end of 2023 and why we are so excited in investing in developing this program. We're often asked about the path to profitability. With our belief in Orladeo being a billion-dollar drug, I feel very confident that we'll get there. In fact, given 2021 revenues, Orladeo is already profitable on a direct contribution basis, which is a great achievement by the team. Right now, though, our strategy is investing in maximizing value creation, allocating capital to continue to enhance and expand the Orladeo launch, to advance our Factor D pipeline across multiple indications, all while continuing to discover new drugs to ensure that we have a robust pipeline to repeat the process over and over again. This is the strategy that gives us the belief that we will be the next great biotech and will result in compounding value for the company and for shareholders in the coming years. With that, we'll open it up for questions.

Thank you. At this time, if you would like to ask a question over the phone, please press star and then 1 on your telephone keypad. Again, at this time, if you would like to ask a question over the phone, please press star and then 1 on your telephone keypad. Our first question will come from the line of Ken Cacciatore with Cowan & Company. Your line is now open.

Good morning, team. Congratulations on all the progress. On the retention rates, it's really been a nice positive, and as you've described earlier, probably better than we originally anticipated. But wondering as we go through having more experience, if there are best practices that could even further improve the retention rate. So learnings from the clinicians and kind of passing along to Salesforce and sharing with other clinicians would like to hear about that. On the renal basket study, obviously given the timing of enrollment, hate to push you on this, but does look like it's possible you could have data by the end of this year, just want to talk about maybe timing of when we might be able to see something from those studies. And then just lastly, any kind of qualitative discussion you can give on the enrollment and P&H, kind of what you're seeing and how is it going? Thanks so much.

Charlie, you want to take the first one on retention, what we're working on, and then Helen can take the other two? Sure.

Hi, Ken. Thanks for the question. Retention, really the best practice that we're seeing is that, and this is true for any HA profi therapy, is that patients really need to be prepared to give a drug a chance in the first few months. And we need to set the expectations so that, you know, number one, for patients who do have GI effects, that they anticipate that and know that those GI effects tend to go away within the first month or so. that if you have a breakthrough attack, breakthrough attacks are common on all therapies. So just to work through that. And what we hear from the expert treaters is, you know, every new drug needs to be given about a three-month-plus chance to see how it's doing for you. So we're really focused on setting those expectations, making sure that we do everything we can to hold patients' hands through that process, and that the HCPs, the doctors and their staff, really set the patients up for success and prepare them for anything that might happen. And we'll keep focusing on that throughout this year to keep up that high retention rate and hopefully even improve it.

Yeah, one thing before Helen answers the other part of your questions, one thing that Charlie and team are doing a really good job is gathering more data and more information about good switches and challenging switches whether it's our product or other products. And so we're getting smarter, Ken, with each month that goes by, and we're applying what we're learning from that to improve those numbers if we're able. Helen?

Yeah. So thanks, Ken, for the questions. On the renal study in terms of timing, so This is a study that, as I said, has three different cohorts. They are each independent, and they will therefore enroll independently. We are pursuing this based on the science. We expect to see outcomes that we anticipate will lead us to proof of concept and to the pivotal trial programs. As I said, though, they will each go independently, and we're also making sure that we get the right patients so that we can assess for efficacy for that proof of concept in this study. So when I say that, I mean that we are doing kidney biopsies at the beginning for entry in order to confirm this, and patients with active disease, it's at the right stage, not too advanced, to be able to assess. And we expect this to take some time. So we have not said which of these we expect to go faster or slower. But over time, we think we will see these arms enroll separately. And we're looking for that target of achieving perfect concepts to advance to pivotal programs for all three within this time frame by the end of 2023. On the second question, which was what we're seeing in enrollment for PNH, we're really very pleased with what we're seeing. We're seeing activation of sites across the globe and enrollment in both studies, as you've heard. So we're right where we want to be with this program and ramping up to add more centers and be on course. So I don't have more color to give on that except that we're really very happy with the progress and the excitement that we're seeing from investigators and centers around the globe on both of these trials.

Great. Thank you.

Thank you. Our next question will come from the line of Tahzeen Ahmad with Bank of America. Your line is now open.

Hi. Good morning. Thanks for taking my questions. For Orly Deo, for your comments about Q1 sales, I just wanted to clarify, beyond your statement in your press release where you said that you expect little to no growth in revenues this quarter due to these formulary resets, could sales be lower sequentially from 4Q? This is a common phenomena that a number of our commercial stage companies experience, and I'm just asking for the extra color to help with modeling purposes. And related to that, what should we expect growth to net to be in this quarter? And then I have a follow-up on P&H. Thanks.

Sure. Hey, Tazine. Yeah, you've got it. This is a common phenomenon. It's really just a reimbursement dynamic in Q1. So we expect the quarter, you know, from Q4 to Q1, this will be the lowest growth. But then we're very confident and very excited about the $250 million-plus for the year, so higher growth in future quarters. So it's really just a Q1 expected reimbursement headwind that, frankly, will turn into more of a tailwind in Q2 as that new contract that I described really takes effect. And then the big driver this year will just be the continued patient filling the funnel with new patients coming in. And what we see in all of our research and all of the feedback from the field is we've got a lot of opportunity in front of us there.

Okay. So just to clarify, you're expecting at worst flat sales? Is that right for the quarter?

Yeah. So, yeah, little to no growth. So at worst is no growth, but it'll be the lowest. We expect it to be the lowest growing quarter to quarter for the year. Okay, thank you.

And then, Suzanne, on your question about the growth to net, yeah, I mean, there'll be a spike, right? Charlie's talked about the reauthorization, and so the free product that we give to make sure that patients have no break in treatment combined with effects that we'll have from things like co-pay assistance will cause a spike. And really, that's what's going to drive, you know, despite the fact that we'll have strong fundamentals, that there will be a temporary adjustment to revenue in Q1.

Yeah, so you've always talked about that 15% to 20% range for gross to net. Would it be slightly higher than that this quarter or still within that range?

Yeah, I think the 15% to 20% that we talked about is on those reimbursed. So when you factor in the free product, yes, it will absolutely be higher than that. And then when you look at only the reimbursed, it may well be a small blip, but again, it would be driven predominantly then by copayses.

And again, this is very typical of specialty products in the first quarter.

Sure. And then on P&H, you've said that you'll finish enrolling 9930, have a data readout, and prep for approval all within two years. When do you think you'll be able to provide additional nuance as to when each of those events could occur? Sure. And then on the competitive landscape, I believe this year Novartis will read out one of its phase three studies for C5 failures, head-to-head versus Solaris. And then also Astra will have combo data for their candidate in refractory patients also at year end. And I'm just wondering, would you see any read-through from these studies to the 9930 program? And if you weren't first to market with an oral PNH drug, do you think that there will need to be meaningful differentiation? among the different products.

So, Helen, maybe I'll take the first question and if you could take the middle one and then Charlie maybe the last one in terms of market. So, it's really hard to give you blow by blow on the enrollment because it changes every week, right? And so, I think our goal is to tell you when we'll give you a backstop of what you'll see at the end of next year. And then as we learn more over the course of the year, we'll make a decision on, you know, do we update you or not. But I think we want to focus you on the end of next year and where we'll be as a priority. And then, Helen, you want to take the middle one?

Yeah, sure. So in terms of read-through from other programs, I think what we're seeing is very interesting, complement-mediated disease. The field is rapidly advancing. We're recognizing that complement is implicated in diseases at an increasing pace. And so we're certainly seeing that in the field in terms of other trials and everything that we see other programs advancing. I think that's validation of the concept that the alternative pathway is implicated in these diseases and can contribute to clinical outcomes. So for us, we'll be watching closely to see what we can learn as those programs generate data and as we see how the regulators respond to that. So we always do that and we will always be incorporating that into our plans. And so I think we're happy to be soaking up as much information as we can and confident in our own program as it moves forward.

The only other thing I'd add to that is the read-through on a combo study isn't super helpful to us because we don't believe that combo therapy is a viable marketed approach. You know, having monotherapy is the key, and we believe we've got a drug that takes care of that, both extravascular and intravascular hemolysis. So we really don't think that combo is a winning strategy. But I'll let Charlie talk about how to compete and differentiate.

So, Tazin, as far as competing, first of all, PNH is just, you know, as you've heard, it's just the first of many indications. So there's massive opportunity for this drug. And we are getting really good at switching patients from injectables to oral. So we think even if we come in second in the oral factor D, factor B space, that we can really compete based on being the smartest out there in terms of how to get patients to switch in P&H. So there will be plenty of opportunity in P&H, and then there will be plenty of opportunity in each subsequent indication. And then even just in P&H, there are areas where we can be differentiated. So we have the only program with two controlled clinical trials, and that may give us the ability to have more readable information on patient-reported outcomes, for example, that will be important in many markets, particularly outside of the U.S. So a lot of places we can compete. We've got a great team, and I'm excited about it.

Yeah, and one last thing I'd add to Zene is bigger is not better here. We're showing that in the HAE space where we're competing against Takeda and CSL. And one of the things that we take tremendous pride in really trying to understand is the behavior that affects decision-making both in the patient and the doctor on switching. We're starting to see that already. We're gathering data in the P&H space with new drugs that are entering the market. And if somebody else gets ahead of us within a whirl and gets into the market, we're going to learn about what works and what doesn't work there as well, and we're going to apply that. So my bet is on Charlie's team because, you know, I've seen what they've done in the HAE space, and I'm confident that they can compete against anybody in P&H.

Thank you. Our next question will come from Jessica Five with JP Morgan. Your line is now open.

Hey, guys. Good morning. Thanks for taking my questions. First, on OPEX, it looks like the OPEX guidance is pointing to roughly 50% growth year-over-year at the midpoint if we exclude stock-based comp. Can you talk about the growth you expect to see in SG&A versus R&D? And within each line, maybe elaborate a little bit more on what's driving that growth relative to 2021? And then second, you talked about the growth in the Orla Deo prescriber base continuing significantly. Can you put some numbers around that?

Yeah. Thanks. Thanks, Jess. So first on the OPEX, yeah, if we look at it, the investment has grown, but it's predominantly based on R&D, right? The biggest growth for Q3 to Q4 and for 2021 to 2022 is going to be to support the Factor D program. And so when I think about the magnitude of the growth, you know, I've got to think about what Charlie was saying earlier in terms of the market opportunity, right? We're talking about a multi-billion dollar opportunity in this pipeline and a molecule. So I think the investment that we're making is perfectly in line with the strategy that we have. um the factor d like i said is going to be the predominance of of the growth um that you're talking about there will be gna growth mainly to support uh rolling out orladeo on a global basis and then there'll be some structural support to make sure from a gna perspective that we can support this growth um but i think with you know growing revenue that we have in orladeo if i think about the net cash utilization as opposed to the opex on a standalone number The cash on hand that we have and the potential opportunity that this investment gives us, you know, I think it's a great way to be allocating the company's capital.

Yeah, and specifically year over year. I mean, think about it. You've got two pivotal studies going on and, you know, many, many, many sites around the world. You've got a proof of concept study and three additional indications. And Helen just told you that we're working on getting up other studies and other indications, and there's prep work, there's supply, there's toxicology, there's pharmacology, there's just a bunch of stuff when you've got pivotal and proof-of-concept programs, and the number of those programs increases over time. So that's the big difference in the specifics around driving R&D costs year over year. And then with regard to the numbers on growth, you know, we're not going to give specifics on the numbers for Orlodeo on patient starts and things like that, but Charlie can give you some color around what we're seeing.

Yeah, just so in Q4 and just like we saw for all throughout all of 2021 is We keep seeing this prescriber base getting broader, and we've talked a lot about our targeting. So we've got the Tier 1 500 doctors and then a big Tier 2 that's roughly twice, maybe a little bit larger than that, where we're really focused. We saw growth in both of those segments in Q4, just as we had in Q3. And then the other key thing is, are we going deeper within those prescribers? So are particularly that Tier 1 a doctor that is very much like the market research I talked about, are they prescribing more? And the answer is yes, they are. They're prescribing more. So that's our focus, to continue to go broad and go deeper. And what we saw in our market research that I described is that both current prescribers and current non-prescribers in that research, both, they all indicated that they intend to prescribe Orodeo over the next 12 months. And so the indicators are there, and that's the team focus.

Yeah, and I think another thing that's got us really excited is, you know, with the pandemic looking like it's easing up, you know, we're seeing more face-to-face interaction. So Charlie and I last week were at the very first regional gatherings of our sales team, and there's a lot more opportunity, Jess, in terms of, you know, not only the top prescribers and getting more of them to prescribe, but also looking at, you know, going deeper in the prescribing. And so we're also looking at going to Quad AI this weekend and, you know, face-to-face interaction. We hear there are more docs coming that were at the college meeting in November. Charlie and I and Helen will be there. And we're really excited about interacting with physicians and, you know, and that's, That talking to each other has a real impact on the enthusiasm for prescribing. So we think that's going to get better over time, and it's a real opportunity.

Great. Thank you.

You're welcome. Thank you. Our next question will come from Chris Raymond with Piper Sandler. Your line is now open.

Good morning, and thanks for taking the question. This is Nicole Gabreski. I'm for Chris. Maybe one around just peak sales guidance. So I know you guys have said that the U.S. opportunity will make up the majority of the new 1 billion peak sales estimate, but you had indicated previously that one of the biggest factors on the ultimate peak revenue potential would be ex-U.S. uptake. So I guess just given this, what gives you confidence in updating global peak revenue guidance at this point? I guess can you just help us frame your thinking here?

Yeah, let me start, and then I'll pass it to Charlie. Let me be really clear. The vast majority of the global peak sales, 80% roughly, will come from the U.S. and the math. I'll let Charlie go through it again. But the math to get there, you don't have to have 50%, 60% market share to get there. It's very reasonable and very achievable. But, Charlie, you can explain more.

Yeah, I mean, again, the math is 2,000 patients in the U.S. and thinking about our pricing and gross to net that Anthony has described as 15% to 20%. That gets you to the $800 million. And we've said previously that X U.S. is going to be more of a volume. The pricing will be lower, so it's volume. And we'll need two to three patients X U.S. to kind of equal one patient in the U.S., But as we start to go to global markets, there's a real demand for an oral prophylaxis therapy, and the markets are transforming more towards prophylaxis as has already happened in the U.S. So I think it's the strong indicators from the U.S. are strong year one. What we hear from future customers ex-U.S. all adds up to that confidence of a billion dollars.

in peak global sales. Yeah, just one quick add to what Charlie said, that 2,000 patients is off a base of 7,500 diagnosed and treated. So that's where you get somewhere between 25% and 30% market share, which is really important.

Okay, that's very helpful. And then maybe, sorry, just a follow-up around competition. Obviously, this is a ways off, but we've gotten some questions more recently around potential competition for Orladeo from gene therapy and gene editing approaches. So just, I guess, thinking about your peak sales guidance, how do you guys think about these other treatment modalities potentially competing with Orlodeo? I guess, for example, do you see them as being, I guess, maybe more restricted to certain patient subsets or something like that?

Yeah, the first thing I'd say is all the competition is pretty far away, so that gives Charlie years, literally years, to be able to capture market share and get those patients that will be controlled on Orladeo, on a once-daily oral capsule. And our belief is if you're controlled on a once-daily oral capsule, then what is the incremental benefit that you're getting from other therapy that would cause you to switch, right? And so efficacy is not going to be it. If you're controlled on our drug, you don't need any more efficacy, right? And so it's got to be something else. And so I think where gene therapy and gene editing could play a really important role is in the patients that are really hard to treat, right? You know, with all drugs, none of these drugs are perfect, and there are patients that are still struggling. And so I think that's a great spot. But, you know, with any new therapy, there is a risk-benefit balance that you've got to cross over, and that's what we learned when we continued to study this in the switching. So what's the incremental benefit? And it's hard for us to see. if you're controlled on our drug, that you're going to switch to something else.

Perfect. Thank you.

Welcome.

Thank you. And our next question will come from Lisa Baco with Evercore ISI. Your line is now open.

Hi. Thanks for taking the question. Most of them have been answered, but maybe you can just elaborate a little bit more on the opportunity in renal diseases for 9930. You know, IgA nephropathy we've been hearing a lot about. There's just a pretty competitive area. There are a lot of compounds in development. Where do you see complement, you know, inhibitors of the complement pathway, specifically factor D or even factor B, fitting in to the treatment, future treatment paradigm there with lots of treatment options? And then maybe you can go through some of the, you know, the opportunity in C3D and the rest of the indications there. Thanks.

So, Helen, maybe start with why factor D inhibitor, you know, proximal inhibition and the alternative pathway make sense for the renal indications. You know, because Lisa's right. There are other products, but they're not working on kind of the root cause of the disease. And then, Charlie, you might want to just talk about how we look at each one of these markets in terms of opportunity.

Yeah. So, in a The nephritis indications in IgA necropathy is one of these. The pathology is driven by complement deposition in the glomeruli in the kidney. And so getting at that complement deposition, addressing the dysregulation of complement pathway, preventing that deposition, and then preventing or improving the damage to the kidneys is getting at some of the root of the basis of disease. And so that seems to be a natural, now that the complement role is understood and now that there are multiple ways possibly getting at this, it seems to be a reasonable way to address that. What we're seeing in the field is that there is benefit then through that and some of the early programs we've seen through proof of concept for the improvement of proteinuria. in these diseases and that that is an indication of the potential to improve the GFR. And so targeting complement has been shown to be a reasonable way to go for treatment for improving premium, improving outcomes. The hope, the goal of treatment long-term is to improve the longer-term outcomes, including reducing the progression to kidney failure and reducing the need for transplant in patients across each of these diseases, IGN and C3G, as you mentioned. So we believe that alternative pathway inhibition with a proximal inhibitor, there are two ways of getting at that currently in development. The Dr. D approach is one of them. I think each of those could be reasonably expected to have similar clinical outcomes. We've chosen factor D because we think it's a better target. There's a structural advantage to that. But we're looking for clinical outcomes that will be, I think, similar for each of those two groups. And it'll come down to what we want to see with the particular characteristics of the molecule in trials.

Yeah. And I think if you hit it at the heart of the biology that causes the disease, You know, our hope is that you see a better outcome at the end of the day. We don't know if that will be the case. That's why we're doing the research and the clinical trials. But, you know, we're going after this target specifically to hit it at the heart of the pathway. And, Charlie, you want to talk about the market?

Yeah. So, Lisa, in the three indications, there's some differences. So C3G is much more in line with, you know, ultra-orphan like HAE. or like PNH, there are no current treatments. For many patients, there's a high risk of mortality. So we're looking at that entire market. For IGN and PMN, as Helen was describing, there are patients who are at higher risk. There are segments of that market at higher risk for advancing to end-stage kidney disease. And so those will be the initial segments that we compete in, all within the orphan space, all within our skill set where we can compete with small teams and, you know, a differentiated product as a proximal inhibitor.

Yeah, I mean, the best way to think about all these things we're going after is it's like another Orladeo marketplace. you know, with each disease or bigger in some cases, right? So just, you know, add up that math and you get to real huge value.

Okay, thanks.

Thank you. And our next question will come from the line of Brian Abrams with RBC Capital Markets. Your line is now open.

Hey, good morning, guys. Thanks for taking my questions and congrats on all the progress with the launch and on the pipeline. You gave a lot of clarity on the seasonal reimbursement dynamics we should expect at the start of the year. I'm curious if we should expect any transient Omicron wave effects on early first quarter demand trends as well. And then secondarily, can you give us a sense of how the impact on some of the recent WAC changes, how some of those changes would impact overall gross to net for the reimbursed patients over the course of 2022. I'm just wondering how much pull through we might expect from those pricing changes to revenues per patient. Thanks.

Charlie, you got that one? Yeah. So, you know, as far as the seasonal reimbursement, well, you're asking about Omicron and whether we'd have any impact of that. Not going to comment on the full quarter until we see the end of it. We're glad that Omicron seems to be on the way out here. As John was saying earlier, we're going to quad AI, so there's going to be a lot more in-person visits with doctors. So we'll see if it has any impact, but we've been working in COVID this entire time, and the team's done really well. So now that we're able to do more in-person meetings internally as well as externally, we're it all just becomes a tailwind and an opportunity going forward. As far as the WAC changes, I think you're referring to the 3% price increase we took last week. And this is all part of our guidance for the year. And, you know, gross to net changes, no, I don't think this will have any impact on gross to net, the same 15% to 20% that we've talked about just 3% higher.

Yeah, and it doesn't affect the contracts we have with payers and stuff like that. So, I mean, this is very common.

That's really helpful. Thanks.

Yep. Thank you. And our next question will come from the line of John Wallenben with J&P Securities. Your line is now open.

Hey, thanks for taking the questions. Just a couple for me on the pipeline. In the RENEW study, I'm wondering how frequently are patients coming in to measure their UPCR. We know enrollment may be different between the indications, but just wondering if you hard and fast want to see that six-month UPCR. We could see, you know, improvements very early on that may trigger you guys to want to go to a pivotal study earlier. And then you mentioned FOP on the call. We haven't heard much about that in a while. Can you just give us a status update and what to look forward to? and 2022 for FOP.

So, Helen, you want to take the first one? I'll take the second.

Yeah. So, with the renewal study, yes, the endpoint that we're looking for there is 24 weeks in terms of the UPTR. We will be assessing it regularly over the course of the trial, and as we said earlier, we'll have 14 patients, up to 14 patients in the cohort. So, we'll be looking at that, and if we... I think possible that we may see sufficient information to consider it proof of concept to advance with patients possibly fewer than 14 and at a time point possibly earlier than the 24 weeks. We'll just have to see in the data what we're observing, and we'll make a decision as we achieve that point.

And then on FOP, John, you know, this program, back when we first started, launched it was invested in differently than 99 30 in the complement program um because we had less capital honestly and so we had to be uh cautious about how we invested so we did it serially rather than in parallel and i'll give you an example while we're running a phase one we weren't building up the drug supply we're doing the additional tox work in parallel which we we do in other programs that you know we're investing for speed and so we're in a bit of a catch-up mode this year. So drug supply and toxicology and planning for patient studies is the bulk of what's going to happen this year. But the key in this space is there's a huge unmet medical need. It's a really difficult disease. And we've seen a lot of failure in this space. It's not easy to get to a situation where you feel like you've got a product that you can get across the finish line. We've seen a lot of companies stumble, and it's not because they aren't doing their job. It's because it's hard. So we're really excited about the data that we've seen in the Phase 1 study so far, both from a safety, tolerability, and drug-level perspective, and have a lot of confidence in 9250 and FOP. So now we are investing. and you'll hear more about this towards the end of this year, beginning of next. Got it. Thanks again for taking the questions.

You're welcome.

Thank you. And our next question will come from the line of Gina Wang with Barclays. Your line is now open. Gina, your line is now open. Please make sure that you are not on mute. Your line is now open for questions. Our next question will come from Justin Kim with Oppenheimer. Your line is now open.

Hi. Good morning. Thanks for taking the questions. Just a few from me. I was interested to see the stronger retention among less convenient modalities like SINRISE. On the type of gyro patient group, though, are there any insights on the dosing regimen of these patients and whether retention differs between those two groups? And then I have a follow-up on B69933.

Yeah, hey, Justin. What we see in the U.S. is most patients are taking the every-two-week dose of Taxairo. But, you know, I don't think it's even just about the dosing. It's really about the overall, you know, burden that injectables place on patients' lives and, you know, refrigeration is required. It's harder to travel with these drugs. So an oral is something that's truly transformative, and I think that's why we see patients switching and And TaxIRO has been consistently the number one prophy product switching to Orladeo.

Okay, great.

And then on 9930, a number of peers targeting the alternative pathway have begun to set their sights on dry ND and GA specifically. Any commentary on how suitable that indication tees up for the company looking beyond renal disease? And Just on the PNH side of things, can you discuss the protocol for transfusion and hemoglobin set points for the naive mom therapy study?

Yeah, so Helen, you can take the second one. I'll take the first one. We're a rare disease company, and so we're really focused on the diseases and complement that affect patients suffering from rare disease. I won't exclude that someday we may explore the eye and indications, but the challenges with those diseases, as we've seen recently, historically is getting the drug to get to the spot in the eye, and oral delivery has been a real challenge for companies thus far, and then keeping it there. And so not opposed to exploring it at some point, but not the priority right now. Ellen?

Yeah, and if I could just clarify the question on the PNH study in the naive patients was around transfusions and what about transfusions?

So what's the criteria for transfusions and sort of the hemoglobin set points for that?

So maybe, Helen, it's around the variation of who gives transfusions and what qualifies as a transfusion, even if they don't get one, if their hemoglobin is low.

Yes. And this is an interesting point in designing the protocol where you have to choose transfusion rate as nine points. we give guidelines in the protocol for when to transfuse, but it is, of course, the physician's decision on when to transfuse. So when you look at how you're going to assess that in the data, we then set in the analysis planning what will be the point at which we consider a patient transfused, and there's a hemoglobin level at which you consider a patient to be transfused, whether or not the physician actually gave it to the patient. So that standardizes, to put it another way, we standardize in the data and the analysis end, which patients we would consider to have been transfused if their hemoglobin reaches a certain level. We then also collect the data on whether they received a transfusion or not, but for the endpoint perspective, it's standardized.

And Helen, the regulators understand the differences from different physicians in different parts of the world, and so they're very supportive of this approach. Is that correct?

Absolutely, yes. This is a... It's a fairly typical way to get to data that has been analyzable in the same manner across different treatment ways that individuals may treat their patients across the world. It's used and recognized by regulators. Thank you. Great.

Thanks so much. Thank you. And our final question will come from the line of Gina Wang with Barclays. Your line is now open.

Hi. Good morning. This is Rashida on for Gina. Can you hear me now?

Yes.

Thank you. Okay, great. Thank you for taking our questions. Most of our questions have been answered, but two quick ones from us. For Orla Deo growth, you've given enough color on the first quarter, but how should we think about the quarter-over-quarter growth in assumption for 2022. Is it more of a linear growth? If you could provide any color there, that would be helpful. And the second question is, in the longer term, how are you thinking for Biochrist? Do you plan to be a standalone company or is the thinking here to be more of like under a big umbrella? So any guidance there or any color there would be helpful. Thank you so much.

Yeah, I'll attempt to answer both and Anthony and Charlie, help me on the first one if I'm getting down the wrong path. But you've got an unusual situation in the first quarter. you shouldn't expect that it's going to be linear from that point forward. The second quarter, you know, first to second quarter could be higher, and then there could be some variability in the third and fourth. So we'll continue to guide you along the way. And, you know, what we're trying to do here is be very clear on what we think we will see in the first quarter and then what we will see for the year. And we're confident in both that, you know, we are, you know, very, very confident that no less than $250 million for the year is and that the first year, for all the reasons Charlie listed, is, you know, little to no growth in the quarter to quarter from four to three.

I think it's important to highlight that that's revenue-focused, right? The fundamentals in terms of getting more patients on drug will continue to grow. You know, the event in Q1 will be centered around revenue, and like John said, from Q2 onwards, you know, I think we'll start to see it normalize in Qs 2, 3, and 4.

Yeah, and then on your second question, I mean, we're building the next great biotech company. It's, you know, that sounds hard, but it's pretty simply stated. And the reason that we have a lot of confidence in that and we say it out loud is because we've got a drug that is going to approach or will get to a billion dollars in peak revenue, and we've got a really full pipeline right behind it. And all of this stuff – came from our discovery engine and our platform. And if you look at the great biotech companies, you pick your favorite one, that's exactly how they got to tremendous value is by investing in their pipeline while they're bringing a new valuable product to the market. And, you know, we think 9930 could be significantly bigger than Orladeo. And that, we think, is very exciting and allows us to, you know, build the next great company.

Great. Thank you so much for the call.

You're welcome.

Thank you. That is all the time we have for questions for today. So now I would like to hand the conference back over to Mr. Stonehouse for any closing comments and remarks.

Thank you. So, you know, 2021, you know, I've been in the company 15 years. It might be the best year we've ever had. But guess what? It's in the rearview mirror. We are focused intently on driving Orladeo, getting it approved in other countries, continuing to build off the great growth in the U.S., and advancing our pipeline. And we will remain laser focused on that so that at the end of 2022, we have another year of great performance to share with you. So thanks for your interest and have a great day.

Thank you, everyone. This concludes our conference call for today. You may now disconnect. Everybody have a wonderful day.