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BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX)

The 25th Annual Piper Jaffray Healthcare Conference Call

December 04, 2013 02:30 PM ET

Executives

Jon Stonehouse - Chief Executive Officer

Analysts

Charles Duncan - Piper Jaffray

[No presentation for this event]

Question-and-Answer Session

Charles Duncan - Piper Jaffray

I think we will get started here. There maybe a few folks that step-in in a few minutes, but I wanted to welcome everyone to the second day afternoon of the Piper Jaffray Healthcare Conference 25th Annual. My name is Charles Duncan, I’m Senior Analyst and Managing Director for the firm. I cover biotech stocks.

Unfortunately at this point, I do not cover BioCryst, although I had for several years prior to myself coming to this firm, my team is coming to this firm. It is a story though that we know and it has been a pretty interesting story this year. It’s undergone quite another transformation. In the last four years, BioCryst has been reinventing itself with the new focus, new management, and new investors, and it’s a pleasure to introduce the BioCryst team.

With me this afternoon is Mr. Jon Stonehouse, the company’s CEO, Mr. Tom Staab, the company’s CFO and Rob Bennett who is the head of Investor Relations. So why don’t we start off also in kind of icebreaker question for you Jon. Why was it that you -- BioCryst is actually one of the oldest biotech companies out there. So why was it that you came to BioCryst a few years ago? Was it the assets or some other opportunity?

Jon Stonehouse

It was discovery capability that company had.

Charles Duncan - Piper Jaffray

Yeah.

Jon Stonehouse

I knew some ex-marketing company, R&D folks that had done diligence and really kick the tires on our discovery capability in Birmingham and Alabama. And they basically describe this is the real deal it has the potential to develop or discover very novel, potent, and specific enzyme inhibitors. And I can say that others that have joined the company since came for the same reason. And so with all the changes that have gone on in the company in the then nearly seven years that I have been in the company, the one thing that is critically important and remains is the core discovery capability that we had in Birmingham, Alabama with Dr. Babu and his team.

Charles Duncan - Piper Jaffray

So, that's a structure-based drug design platform?

Jon Stonehouse

That's right. And Babu got good at this around the time and others like George Boger at Vertex rates (inaudible) at 3D PE, the Agouron folks. So that’s his peer group. And he built a team and we have been working on this for 20 years. And it's not that it's such a novel drug discovery. I don't think many people do it well. It's more our firm understanding the shape and charge within a socket at the target. And then being able to build a small molecule that fits very tightly based on again charge and shape.

Charles Duncan - Piper Jaffray

Yeah.

Jon Stonehouse

And Babu and his team are some of the best, they are world class.

Charles Duncan - Piper Jaffray

Yeah. So at one time, I actually covered Vertex, Agouron and I honestly believe that this is a platform that can yield the drug. This last year the stock has done some pretty amazing thing in part because of some early data with the drug that call it a year ago no one focused on. This is candidate called 4161 for hereditary angioedema. Once you provide us a little overview on that program and where you are at in the recent data. And then we will talk about where you are going.

Jon Stonehouse

Yeah. So I remember recruiting Bill Sheridan into the company in mid 2008 and one of the things he was most excited about was the possibility of coming up with an oral kallikrein inhibitor and Babu had talked to him about 4161. So why are we really excited, it’s an absolute game changer for patients if we are successful in coming up with effective safe and well tolerated oral prophylactic. The target is validated, currently patients are preventing attached with either androgens that has horrible side effects or with Cinryze which while I think it’s a very good drug has to be infused twice weekly.

So with a validated target and critical unmet medical need what you need then is a molecule to fit that space and that’s what we believe we have with 4161. So when we got the data from the Phase I we were incredibly, because excited it’s a drug that had been sitting on the shelf of BioCryst and had low oral bio availability and we had done years with the formulation work to improve the consistency of drug exposure. And when we saw -- and so -- but it had bio availability of around 5%. And so when we started to see the exposure curves in single ascending dose we got very excited and we saw the multiple ascending dose and got even more excited and then we saw the effects on the pharmacodynamic market, the target kallikrein and we think we have drop.

Charles Duncan - Piper Jaffray

So let me ask you, if when you think about clinical need or unmet need, and you mention Cinryze, you mentioned androgen. So I think we can kind of dismiss androgen but Cinryze, there are some smart folks who have been working on that for a while and marketing it. If that was a subcutaneous version of Cinryze, do you think that would swap the need or do you think there would still be a value add of your approach?

Jon Stonehouse

Yeah. So I think anything that improves the delivery is good for patients. So subcutaneously better than twice weekly IV infusion. But I think there is challenges as announced big value is putting a pure type plasma protein under the skin, so there are challenges with that. But at the end of the day people prefer capsules and tablets over needles. So I don’t care if it’s subcutaneous or it’s IV infusion, if we are able to bit forward in all row, I believe that is going to be the market leader with prophylaxes.

Charles Duncan - Piper Jaffray

Yeah. Now you recently had some data in I believe normal volunteers and you showed some need kallikrein inhibition. Why do you have confidence that that data is going to hold up or had predictive value for a person, who is an HAE patient?

Jon Stonehouse

So before we actually got the Phase I data we did some in-vitro work where we took HAE patient plasma and we have developed an assay that could measure kallikrein inhibition. And what we saw was varying concentrations of 4161 on a very nice s shape curve.

Charles Duncan - Piper Jaffray

Okay.

Jon Stonehouse

And around kallikrein inhibition. So then we said well that's good to know but we need something to compare it to. So we got purified C1 research grade that's comparable to Cinryze and we put those into micromoles and measure the kallikrein inhibitory activity at different concentration and compared the two and mole behold 4161 was 15 times more potent than C1 inhibitor. And when I say C1 inhibitor what we were not able to do is separate out, the C1 that we had added to patient plasma and the C1 from the patient plasma, because remember even if you are an HAE patient, you have one good gene, one good allele and you are producing I think the average is about if normal is one unit about 30% of that.

Charles Duncan - Piper Jaffray

Yeah.

Jon Stonehouse

So we could not separate that. So we think that 15 times greater potency is a conservative measure of potency. And then we identified what concentrations would be to seems in based on the package-ins for Cinryze and then extrapolated that over to our curve and what concentrations would be necessary to have to be the same as that again recognizing that as both endogenous and exogenous C1 and that came to 25 to 40 nanograms per ml.

So that was the target range that we felt we needed to be at or above or near in the dosing interval with 4161. And then we got the Phase I data and lowering the hold in the 400 milligram and the 800 milligram dose every eight hours, we saw that we were in that zone. So I think it’s conservative. And Bill even shared at our earnings call for the last quarter that and this is an important thing for investors to know that because of all different the agents that we put in [allegic] assay, the substrate in this assay that you’ve to dilute plasma four folds. So if you look at that chart that Bill presented it says divided by four at the bottom. And so we think that is an even greater because it’s….

Charles Duncan - Piper Jaffray

Under that volume?

Jon Stonehouse

Yeah, because of volume. We think we're even greater on that estimated of the effect on it the target. So, we're going into the Phase 2a study with a high degree confidence that we'd be able to have an effect on attacks.

Charles Duncan - Piper Jaffray

Now let me ask you about the dosing regimen. And maybe the short comes in the recent study. In addition to I'll call it not using patients. What do you think about the dosing regimen? Do you think it -- you mentioned it's a drug. So it's an active drug, is it a viable drug? What kind of approach?

Jon Stonehouse

Well. So let's talk about what the goal of the 2a study is.

Charles Duncan - Piper Jaffray

Yeah.

Jon Stonehouse

This is a proof-of-concept being able to demonstrate that we can have an effect on attack rate in HAE patients and actually HAE patients have a very high attack rate of one or more per week. This is not the final formulation, this is not the final dosing schedule. And so when you go into a proof-of-concept study, you want to give the drug its best shot access.

Charles Duncan - Piper Jaffray

Okay.

Jon Stonehouse

So with all those conservative caveats that I have mentioned before about the assay, we could be overshooting.

Charles Duncan - Piper Jaffray

Okay.

Jon Stonehouse

In the study. And if we are, it's possible that it could be twice daily dosing instead of three times or every eight hours. We now have 100 milligram heart gel capsule. So it's for the 400 milligram dose three times a day, it's four capsule. For hypertension or heart burn that's a heavy pill burden. But for HAE patients that are getting twice weekly IV infusion you would be surprised that how that doesn't sound all as that. But we think we can even get that down further. We haven't gotten there yet, perhaps through soft gel capsules, we can reduce the pill burden maybe there is some other things that we can do to get the pill burden down and still have an effect on attacks, but people, investors should remember that this is a proof of concept study. This is not the end game with 4161.

Charles Duncan - Piper Jaffray

Right. So what would you like to take out of the proof of concept study? First of all what is the attack rate in terms of the patient enrollment target, and then what is the percentage change that you would like to see to again believe that you have a viable drug?

Jon Stonehouse

So as I said before, we are pretty bullish about what outcome we could get here, but we are also looking at what could be the various outcomes of this study. So we have taking very high attack rate patients, as I said before, one or more per week, it’s only a four-week period on drug instead of a typical 12-week because we are not advanced to 12 weeks yet in our task program, that will be coming soon but for this study it’s four weeks.

And so if we were able to show a 50% reduction in attack rate, which is what lead this all with Cinryze in their pivotal studies, within oral, that’s a grad slam result in my view. If it’s better than that, I don’t even know the words to describe that. If it’s less than that and I don’t believe that it will be, but let’s say for the sake of argument and game conservative, it is, let’s say that it was half of that, let’s say it was 25%. If that’s a result of 15% of patients wiping out their attacks and the other ones not really having much of an effect on attack within an oral, that’s still a drop.

Charles Duncan - Piper Jaffray

Well, the thing is multiply that by compliance, again improved compliance and the other thing you mentioned the lab results, that was in a 12-week study.

Jon Stonehouse

Correct.

Charles Duncan - Piper Jaffray

And so in six weeks if you saw…

Jon Stonehouse

Four.

Charles Duncan - Piper Jaffray

Or four you may see in all additive effect overtime. So, when you are going to start that study and when you are going to finish it?

Jon Stonehouse

So we have started it. I think it was early in the second week of November, we announced that we had dosed the first patient. It's a study where we are using sites in Germany, patients concentrating four or five sites in that country and we are enrolling patient as we speak, still way too early for me to predict with any great fidelity of when the study will be done. The only thing I can say is I believe we are still on track to get it done in the first half of next year.

But I would like to get more time under our belt before we give you a greater fidelity around, when we think we can finish in the first half of next year.

Charles Duncan - Piper Jaffray

Why do the study in Germany?

Jon Stonehouse

Couple of reasons. One, and this is an important one, because we are looking at these high attack rate patients, we want to make sure that there is some documentation of that, and in Germany, the HAE Association has electronic diaries that are linked to the patient’s medical record and so there is really good documentation on attack frequency in Germany. So we think we are getting better quality information around attack rate and therefore selecting the right patients.

Charles Duncan - Piper Jaffray

Excellent.

Jon Stonehouse

Second is, there is fewer sites to work which when you are doing a small study, that’s a good thing. And so we are working with roughly four sites in Germany and just easier operationally to do it. In future studies, we will be expanding to the U.S. and other countries around the globe, but for this study, Germany is perfect.

Charles Duncan - Piper Jaffray

Sounds like a pretty steady approach to getting that study done. So you are saying maybe your data next year.

Jon Stonehouse

Yeah, first half. I hope to give better fidelity sometime, I think in the first quarter when we have the bit more experience under our belt but -- yeah, first half.

Charles Duncan - Piper Jaffray

So what about next gen 4161, how is it different? And when can we see that to emerge?

Jon Stonehouse

So it’s interesting. We study that program as a backup to 4161 and the team made some great progress, so we set, 4161 because of charge largely has trouble with permeability. And so we said if we build a backup with a different scaffold or completely novel drug, could we overcome that? And (inaudible) behold our team with successful and coming up with several molecules with all bioavailability in the range of 20% to 60% compared to 5% with 4161.

So then we get the Phase I data for 4161, and we’re like wait a minute, we really have a drug here. So the bar just went out dramatically for the second generation; we don’t call it a backup anymore.

Charles Duncan - Piper Jaffray

Yeah.

Jon Stonehouse

We call it next generation, because it’s got to be better. And so what we’re looking for now and not there yet, but the bar is now one tablet once a day wipe out tox, right? Let me say that one more time. One tablet once a day, wipe out attacks. And so, that's all goal, its’ a big goal, if get close to that. This could be a huge opportunity for us. And so similar potency, 4 to 12 times greater bioavailability, and very specific and selective blocker. We think that we can make an improvement on an already good 4161.

Charles Duncan - Piper Jaffray

Yeah. And IP on based on 4161 and then on the backup?

Jon Stonehouse

Yeah. So it was an a older discovered molecule, when Bill and I came into the company and with Bob we decided to move it forward. So we’re going to depend on orphan exclusivity, some seven years in U.S. and 10 years in Europe.

Charles Duncan - Piper Jaffray

Okay.

Jon Stonehouse

Six, seven years in the U.S. and ten years in Europe. We're also going to look at protection around formulation, but those are always tougher.

Charles Duncan - Piper Jaffray

Yeah.

Jon Stonehouse

But next-generation will have complete brand new IP because it's new molecule, new scaffold, new molecular in it.

Charles Duncan - Piper Jaffray

So, at this point are there any questions from the audience? Yes, sir.

Unidentified Analyst

(Inaudible)

Jon Stonehouse

So the question was Phase 2a is going to be done in Germany, where was the Phase 1 done? It was at site in the UK, a Phase 1 facility in the UK.

Unidentified Analyst

(Inaudible)

Jon Stonehouse

There is an active IND. I think we reported, we were on clinical hold, because we were doing formulation of the drug at the bed side, in the Phase 1 unit. And this was the time when the New England compounding center had fungus and various injectable drugs. And so they wanted GMP manufacturing. We found the UK site that actually does that. So we submitted that data back to the FDA and hold was removed. So we're able to start trials in the U.S. when we want to. So, it likely the 2b study in the second half of next year.

Charles Duncan - Piper Jaffray

Any other questions on 4161?

Unidentified Analyst

(Inaudible)

Jon Stonehouse

So tox studies on 4161 or the second-gen? Okay. So the question was where we would tox with second-gen? Well we haven't selected a lead yet. So we haven't done tox, our goal is to select one to three leads by the end of this year. So that’s very soon. And then we may move as many as three molecules through preclinical development.

Charles Duncan - Piper Jaffray

And the tox on 4161.

Jon Stonehouse

It looks pretty good so far. So we’ve done four week tox, we’re wrapping up 12 week tox and then we’ll start more chronic tox. And so far so good on 4161, nothing that jumps out of this as any major concerns.

Charles Duncan - Piper Jaffray

And after the approvals of well Cinryze what do you think about the regulatory path in terms of the duration of dosing, has it changed have you had any interactions with the agency yet?

Jon Stonehouse

We have had some interactions early on with the agency but until you have data with your drug in patients, it’s kind of hard to really have a meaningful conversation with the agency about what the program looks like. We are not assuming that we are going to have a less 22 patient one study file ready set approval. I think those data probably gone.

Charles Duncan - Piper Jaffray

Yeah.

Jon Stonehouse

But depending on the efficacy, we will push it things as hard as we can but we are planning on doing a Phase 2b starting next second half of next year and then ultimately doing a Phase 3 study that’s the plan.

Charles Duncan - Piper Jaffray

Okay. Any other questions on HAE? I was going to hop over the floor because it seems like it’s good to say, boy you do have conversations with the agency on something and in fact probably quite a bit and that is peramivir; are you still on track for an NDA?

Jon Stonehouse

Yeah we are. It’s one of the reasons Bill has been with us at this conference. He is busy with Elliott Berger, our Head of Regulatory and the rest of the team working on the NDA filings. We are on track and expect that we will get that submitted before the end of this year. And it’s an exciting time for the company because it’s our first U.S. NDA. So the teams busy, we are on a track.

Charles Duncan - Piper Jaffray

And what is the indication that you anticipate seeking?

Jon Stonehouse

So acute and complicated, and yeah, we’ve got questions from investors, how can you file NDA when you had failed Phase 3 study. So, I think it’s important for people to remember that history here of how peramivir went to clinical development. So remember when we first step funded with BARDA we started out with acute on complicated set of studies as well supporting hospital data. Then, in 2009 pandemic hit and FDA gave us emergency use authorization and 1200 plus patients in the United States were treated. And we just started Phase 3, so base that EUA a lot on the Phase 2 and other safety data that we had.

But then the view had changed as well where BARDA felt very strongly that was important to focus the program on hospital and to the pandemic and the seriously yield, and so that’s where the funding land. And so, no one has ever been conducted a successful trail of an antiviral and influenza in seriously hospitalized patients. And the bottom line is they’re hard, the diversity of patients, 70 year old with other complications, but otherwise doing pretty well, physicians are afraid that they might tip over and so they put them into the hospital versus the 27 year old that’s got viral pneumonia and is on a ventilator.

How do you do a study when that kind of diversification and the patient type, and then the end point was a community acquired pneumonia endpoint and fortunately it didn’t work. In flu when you gave people fluids, most of the parameters drop like a rock to normal and fever was the only thing that remained elevated.

So we then step back and we said what we do we have and we looked at where peramivir had been approved in other parts of the world: Japan, Korea and even now China. And it was acute on complicated studies with supporting data in seriously ill, not efficacy, but safety data. And sure enough, we went to the FDA and we asked a very specific question in type C meeting and that was does -- is a single Japanese study sufficient with supporting data from other trials in the U.S., sufficient for a reviewable file? And they had every opportunity to say no go do another study and they did. And then we had a pre-NDA meeting and BARDA has been in attendance with us in all of these meetings. And after that meeting, BARDA released $12.8 million to do the remaining work to the filing.

So, we feel pretty good about our chances for peramivir to get approved. And I would say for those who are sceptical, I would say, look at the unmet need here, right? Does the world need another drug that makes you feel better a day earlier, probably not, does the world need an IV neuraminidase inhibitor? Absolutely.

And I think that's where you are seeing some of the flexibility, actually government.

Charles Duncan - Piper Jaffray

So, any chance that there could be a panel meeting on this?

Jon Stonehouse

Yes, very likely.

Charles Duncan - Piper Jaffray

Okay.

Jon Stonehouse

That there will be an advisory meeting, maybe as early as the spring.

Charles Duncan - Piper Jaffray

And that's because the new chemical entity or is there some...?

Jon Stonehouse

I think that's one of the (inaudible) so that’s part of the process. So we expect that -- not expecting that to be an easy process. And I’d remind investors that when Glaxo brought Lorenza through, they had a negative 15 to zero vote and they still got approved. So look at the history of how these neuraminidase inhibitors get approved. But yeah, we will have advisory committee.

Charles Duncan - Piper Jaffray

Well unfortunately Jon, we are out of time, but I’m looking for to that information flow in the New Year. And I appreciate you spending time with us in the BioCryst story.

Jon Stonehouse

Yeah. Thank you very much Charles.

Charles Duncan - Piper Jaffray

Thanks Jon. Take care.

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