Good day, and welcome to BioCryst Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Nick Wilder. Please go ahead.

Good morning, and welcome to BioCryst's Third Quarter 2025 Corporate Update and Financial Results Conference Call. Participating with me today are CEO, Jon Stonehouse; President and Chief Commercial Officer, Charlie Gayer; Chief Development Officer, Dr. Bill Sheridan; and Chief Financial Officer, Babar Ghias. A press release and slide presentation about today's news are available on our Investor Relations website. Today's call may contain forward-looking statements, including statements regarding future financial 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. For additional information, including a detailed discussion of these risks, please refer to Slide 2 of the presentation. In addition, today's conference call includes non-GAAP financial measures. For a reconciliation of these non-GAAP measures against the most directly comparable GAAP financial measure, please refer to the earnings press release. I'd now like to turn the call over to Jon Stonehouse.

Thank you, Nick. We are very pleased to report yet another strong quarter for the year. Starting with ORLADEYO, we continue to see strong revenue growth year-over-year on a growing revenue base, well on our way to $1 billion at peak. Charlie will share the details as this was the first quarter with new competition, and we continue to see strong underlying growth and a growing prescriber base as we predicted. Next, we closed the sale of our European business and paid off our Pharmakon debt. And this not only cleaned up our balance sheet, but put us in a very strong financial position, generating operating profit and positive cash flow. Babar will share more details regarding our financial position. We are also making progress with our pipeline and expect early data that should give an initial view on activity and dose from our DME program, and we plan to share this early next year. If these data are encouraging, we have also made a decision that given the program is outside our rare disease area of focus, we will look to spin out or partner this program to put it in the hands of someone better suited to advance it further. Regarding BCX17725, Bill will share encouraging data from our healthy volunteer study showing evidence that the drug does get to the skin following IV administration. This is important as this is where the target for Netherton syndrome is and with a very potent inhibitor in BCX17725, we are excited to see in Netherton syndrome patients what effect it has on the disease. Enrollment is taking a little bit longer than planned, and we now expect early data in a small number of Netherton syndrome patients later in Q1 next year. Lastly, having announced the proposed acquisition of Astria last month and the expected close in Q1 next year, we are extremely excited to add a late-stage asset, navenibart, to our pipeline to leverage our expertise in HAE and bring patients a new treatment option with a low burden of administration. So clearly, we have been busy since last reporting quarterly earnings, and this is shaping up to be another outstanding year of performance for our company. With that, I will turn it over to Charlie.

Thanks, Jon. We entered the final quarter of 2025 with continued momentum. We are raising our ORLADEYO revenue guidance to between $590 million and $600 million for the year, even after closing the sale of our European operations on October 1. And the exciting possibilities of the ORLADEYO granules launch for kids with HAE and the acquisition of Astria are just ahead. ORLADEYO continues to be the most differentiated prophylaxis therapy for patients with HAE. Most HAE patients would rather prevent their attacks with an oral therapy. Physicians know this, and they trust ORLADEYO. Even as 2 new prophylaxis products launched recently, offering patients the potential of once monthly injectable dosing, new prescriptions for ORLADEYO continued at the same strong pace we have seen over the past 2 years. In fact, we slightly exceeded the new patient prescription total from the third quarter a year ago. We also continue to expand the number of ORLADEYO prescribers with 64 new prescribers in the U.S., exceeding the average of the past 8 quarters. The well-established trends in patient retention remained unchanged, and we ended the quarter with a paid patient rate of 82%, right in line with the typical second half pattern compared with the first half of the year. As always, we're very pleased with the great results, but not surprised. Our deep insight and market simulation works consistently predicted that the growth of ORLADEYO would not be affected by new competition. We updated that work over the summer, and the 2025 results were nearly identical to the 2024 results, as you can see on Slide 8 in today's presentation. With the expected addition of ORLADEYO granules on top of the existing strong growth trends for ORLADEYO capsules, our market simulation continues to predict $1 billion in peak revenue for BioCryst…

Thanks, Charlie. I'm very pleased to be able to share some findings from our ongoing Phase I study of BCX17725, our novel investigational KLK5 inhibitor designed to replace functions of the natural inhibitor that are deficient in individuals living with Netherton syndrome. This trial is designed with multiple goals in mind: number one, understanding the preliminary safety profile of BCX17725; number two, quantitating its systemic exposure with serum drug levels; number three, evaluating the distribution of the drug into the epidermis. This is very important because the target enzyme, KLK5 is expressed in that location. Number four, assessing its potential early treatment effects on signs and symptoms of Netherton syndrome. We are planning to first do this in a few individuals living with NS in Part 3 of the trial. The trial has so far progressed through multiple cohorts in healthy volunteers with different cohorts administered single or multiple doses of study drug. This gives us a handle on the first 3 goals. The dose level of BCX17725 has been progressively increased with up to 12 milligrams per kilogram administered by IV infusion. In the multiple ascending dose portion, 3 doses were given on a Q2-week schedule. In this trial, administration of BCX17725 has been safe and well tolerated with no safety signals seen and preliminary assessment of systemic exposure profiles supports continued testing of up to every 2 weeks dosing regimens. Some representative images from skin biopsies taken before and after dosing in healthy subjects are shown on the accompanying slide. These small punch biopsies are taken under local anesthetic and processed for imaging. The images shown use a technique called immunofluorescence microscopy. Antibodies are applied that specifically bind to the protein you want to detect, in this case, the drug, BCX17725. These complexes are then detected with secondary…

Thanks, Will. My first full quarter as CFO of BioCryst was extremely eventful and was marked by several significant achievements, which I believe position us well for future growth and profitability. On October 1, we successfully closed the sale of our European business, providing an immediate boost to our financial position, enabling us to fully repay our Pharmakon debt. During Q3, we worked diligently on a highly strategic and transformative acquisition of Astria Therapeutics, which we announced last month, an acquisition which is expected to strengthen our presence in HAE and solidify double-digit growth trajectory for our portfolio over the next decade. As part of this proposed transaction, we also worked on securing a strategic financing partnership with Blackstone at a highly attractive cost of capital. Upon closing of the Astria acquisition, which is expected in Q1 2026, we will access up to $400 million of cash from this facility. But all of this was only made possible due to the continued strength of ORLADEYO and our improving operating performance. Please refer to our third quarter financials in today's press release. However, I would like to take a moment to elaborate on some of these accomplishments and their impact on our trajectory. Total ORLADEYO revenue was $159.1 million, representing 37% year-over-year growth. Of that ORLADEYO revenue, $141.6 million or 89% came from the U.S. As you heard in Charlie's remarks, we continue to see strong momentum in our business despite the recently announced approvals. Non-GAAP operating expenses, excluding stock-based comp and transaction-related costs were approximately $108 million (sic) [ $118 million ] for the third quarter of 2025, up from approximately $92 million in the third quarter of 2024. Some of this increase was driven by continued investment in R&D, which continues to be a priority for us. As you…

[Operator Instructions] First question comes from Jessica Fye with JPMorgan.

This is Jose for Jessica. Of the 37% year-over-year ORLADEYO net revenue growth, how much of that was volume? And how much of that was better paid rate or net price? And on that front, how should we think about gross to net this quarter and going into 2026? And very quickly, how confident are you that you can maintain steady patient retention rates given the increasingly competitive landscape?

I can start with that question. So of the 37% year-over-year, we had really steady -- we've had very steady volume growth over time, but there was a big portion of it that was price based on the improvement in paid rate that we described earlier this year, particularly in the Medicare segment. So the volume is growing at the pace that we expect and at the pace that we need to get to the $1 billion in peak revenue in 2029. As far as the patient retention with new competition coming in, as I mentioned in the remarks, our patient retention has been identical to our ongoing trend, not affected at all by the new products coming in the market, and we expect that to continue.

Yes. And I'd just add, the logic behind that is these patients are really well controlled. They're getting similar control to injectable drugs, and they're on a once a day pill. And so what on earth would they switch to that could be better than that.

And then gross to net is still about 15%, as we've announced earlier this year.

And next year in that 15% to 20%...

Yes. Next year, it will still be in the 15% to 20%, probably a little closer to the 15%.

The next question comes from Laura Chico with Wedbush Securities.

One question with respect to the new prescriber numbers. I think this is the second quarter in a row you've been over 60. Just curious if you have any feedback, market research that can help us understand why they're deciding to prescribe now? What has been kind of the motivating factor more recently to accelerate the adds here? And then I guess, if you could share a little bit more color on what would the expected blended royalty rate look like in '26? I know you're projecting a step down over time here, but just kind of curious how we should be thinking about it directionally from '25 to '26.

I'll start with -- thanks, Laura. I'll start with the prescriber data and then hand it over to Babar on the royalties. So the motivating factors, and we've described this before, is just physicians getting more and more comfortable with the long-term evidence, the real-world evidence for how well ORLADEYO works. What they understand now is that ORLADEYO works very well, equally well to injectable products in most patients. It either works or it doesn't. And if the patients don't have the benefit that they need, they move on. So physicians are really understanding that. That's the first part. The second part is our ability to find prescribers in this market and accurately target means that we are able to find physicians who have a smaller number of patients. So if you have one HAE patient, we will find you and ORLADEYO is becoming the treatment of choice for those doctors. Overall, as we grow the number of physicians, we consistently see a pretty equal balance between those smaller prescribers as well as the top 600 or so doctors that treat 50% of the market. So we keep chipping away at those top prescribers and launch to date over 80% of those doctors have prescribed. So we're really thrilled to show this consistent progress expanding the number of prescribers.

And just one other thing I'd like to add, Charlie is, there's still physicians out there even in the top prescribers that haven't written for ORLADEYO. And one of the things we're extremely excited about next year is the pediatric approval because these docs have pediatric patients, many of them, and there is no reason that they should use anything but ORLADEYO for prophylaxis for these patients. So we think that's going to open up even more new prescribers next year.

Yes. And on the royalty section, we are pleased to share that this quarter, we are tripping over the lower threshold, and it will continue to come down. As you can see in our slides, prepared slides, the rate is in the early -- the blended rate is in early teens. And while we have not given 2026 guidance, I can assure you that rate continues to come down because there's a cap on some of those royalties when you hit the $550 million. But as you can imagine, when we are out to provide you guidance, when you do the math, it will be -- it will continue to decline. And as we've said, over time, it will be in single-digits as we pay off the OMERS liability altogether.

Yes. So as revenue goes up, profitability gets better and better and cash flow continues to flow. So it's a very bright financial future.

The next question comes from Stacy Ku with TD Cowen.

Congrats on the progress. So we have a couple of questions. First, on the new entrants, our KOLs do indicate there are a couple of patients switching from ORLADEYO to injectables, but the same clinicians are also saying that they expect ORLADEYO's share to stay stable. So beyond this anecdotal feedback and obviously, you all have highlighted the 1-year 60% retention. Are you able to share any recent metrics to suggest ORLADEYO is unlikely to be impacted by these injectable entrants? That's the first question. And then the second is on that pediatric HAE approval. As we approach the PDUFA date, maybe help us understand your views on the opportunity and what commercial strategy and preparation is ongoing to really make sure you all maximize that pediatric expansion? Are many of these patients already identified? Just help us understand as we get to the new year, any type of expectations around maybe some latent patient demand.

Sure. Thanks, Stacy. As far as the new entrants, yes, of course, some patients are switching from ORLADEYO because 40% of new patient starts on ORLADEYO drop off within the year. And in the past, they might have dropped off to TAKHZYRO and HAEGARDA, now maybe they're more likely to switch to some of the new entrants. So that's exactly what we expected. What we're not seeing, though, is a change in our new patient prescribing patterns or a change in our overall retention rate. And as far as the data that give us confidence in this, as I mentioned, Slide 8, we redid our market research. We redid our big conjoint analysis and market simulation with all the new information about new and future competitors. And what you see is no change to our prior versions of this market research. It shows that ORLADEYO remains -- ORLADEYO patients remain very sticky, and we expect that to continue. As far as the pediatric approval, we see that there are about 500 patients today diagnosed with HAE under age 12. And only about 40% of those patients today are on or kind of in the prophylaxis space have tried prophylaxis. So we think that there's an opportunity both to grow the use of prophylaxis within pediatrics as well as for switching because an oral therapy is important to a lot of patients, but it's particularly important to kids with HAE. So as far as our strategy, and Jon mentioned earlier, the doctors that treat kids with HAE tend to be the same physicians that are treating patients over age 12. So we're already calling on these physicians. We know who is treating kids, and the team will be ready to go with the launch shortly after approval.

The next question comes from Steve Seedhouse with Cantor.

I was hoping you could expand on the decision to deemphasize, I guess, avoralstat for DME. Have you had an early look at the Phase I data there? And then looking at the updated pipeline slide, the undisclosed programs listed for rare diseases, at least that are preclinical. Can you give us some insights into what you're working on there preclinically and how close it might be to the clinic?

Yes, I'll take that one. So regarding avoralstat, no, we haven't seen any of the data. We just enrolled the first cohort. And so this is a decision based on focus and expense. And by bringing a late-stage product like navenibart into our pipeline, we need to create space to be able to fund and bring that to the finish line. And these DME programs get really expensive the further on you go in clinical development. And quite honestly, we don't have the expertise there we do in rare disease. And so we just think it's better in the hands of somebody who has that expertise. And then on the undisclosed, we're not going to disclose what it is. It's early. It's exciting. But when it's ready to be shared, we'll have more information to share with you.

Okay. And just quick on Netherton. Have you had any dialogue with regulators there and forming an understanding of what a pivotal program requirement might be?

Yes, we have. Not enough to share with you the design of the pivotal program at this point. I think the biggest thing, and Bill, you can correct me if I get this wrong, is the bigger the treatment effect, the better options we have to move fast with this program. And we'll figure that out once we start getting data. But too early to predict kind of the design of the pivotal program. Is that fair, Bill?

That's very fair. I think once we have evidence of the effects of the drug in patients with NS and the safety of the drug in NS, then we'll have complete conversations with regulators about how to get it approved.

The next question comes from Maurice Raycroft with Jefferies.

Congrats on the progress. I'll just ask a couple of quick ones on Netherton. Wondering if you could just talk more about the slower enrollment there and how many patients you'll have in the first quarter data update next year? And do you anticipate dosing higher than the 12 mg per kg? And I'm wondering if you're still exploring the subcu dose? Or is it going to be an IV dosing going forward?

Yes, I'll take the first part of it. You want to take the second. We're only off by a quarter. So it's a very slight delay in the program. And the enthusiasm, as Bill said, by investigators is really high, especially when they see the healthy volunteer data. We didn't expect to see the drug get to the target in healthy volunteers. And so that has been really encouraging data. And then, Bill, do you want to take the second part of the question?

Sure. Yes, we're exploring both subcutaneous and intravenous administration. We'll continue to do that. And we may explore higher doses, that option is open.

The next question comes from Brian Abrahams with RBC.

Congrats on the continued progress in the quarter. Maybe just continuing on Netherton. Can you elaborate a little bit more on, I guess, what you're seeing from a PK/PD standpoint in those first couple of parts of the ongoing study? And I'm also curious what the trigger was for starting that Part 4, which I know you started in recent weeks. And then just secondarily, separately on ORLADEYO, just wondering what you're seeing in terms of demand from the normal C1 inhibitor population. I think that was a growth driver you cited in the past.

Bill, do you want to take the Netherton and Charlie can take the ORLADEYO?

Sure. So Netherton is a fascinating disease. So it's all about what's happening in the epidermis. There aren't any plasma or serum biomarkers to measure. Secondly, we have a very tight binding, very potent inhibitor. And you have to think about what relationship the plasma concentration is going to have to the effects in the epidermis. And there could, in fact, be a disconnect between how long the drug sits in the epidermis after binding to the target compared to how long it circulates in the plasma. That being said, of course, we're measuring the blood concentrations of the drug, nothing unexpected there. Solely on that basis, we think that it's worth continuing to explore up to every 2 weeks dosing. But really, it's going to be looking at the effects on the disease. There aren't any pharmacodynamic markers to measure. It's the effects on the disease in patients with Netherton and when we get into that. Just a clarification, we have not disclosed whether we've started Part 3 or Part 4. Part 3 is just a few subjects with short-term dosing. That's the design. Part 4 enables longer-term dosing, and we look forward to stepping through both of those.

Yes. And the expectation is that the data we'll have in the first quarter is Part 3. Charlie?

Yes. Brian, on C1 normal patients, launch to date, that's been about 1/3 of the patients on ORLADEYO, and that's what we saw in Q3. Q2, you might recall, we had an exceptional best ever quarter for new patient starts. There was an additional bolus of C1 normal patients in Q2 because we released some new data. Q3 looked like the steady high demand that we've seen over the last 2 years with about 1/3 of the patients being C1 normal.

The next question is from the line of Jon Wolleben with Citizens.

Just looking at sales so far this year in your guidance, it's implying that we're going to see a drop in quarter-over-quarter sales for the first time. We haven't seen that seasonality before. So hoping you could talk a little bit about your expectations, what's driving that? And if that's something we should expect moving forward or if this is going to be a one-time seasonality effect?

Yes, Jon, it's going to be a one-time seasonality because we just sold our European business. So we're losing the sort of $10 million to $15 million of revenue that otherwise would have occurred. So next year, you will not see a drop in Q4.

Mr. Jon, does that answer your question?

Yes.

The next question comes from Belanger Serge with Needham & Co.

This is John on for Serge today. Just wanted to touch on pediatric ORLADEYO with the ongoing review and the PDUFA in mid-December. Just curious if you guys have seen any impacts from the government shutdown, whether you've had continuous feedback from the FDA and whether you expect them to still meet that PDUFA. And then pending product availability, do you have any expectations for how the payer landscape will look in this segment? And whether or not you could expect a bolus of patients to come on board early upon product launch?

So I'll take the first part. Charlie, you take the second. So with regard to the interactions with FDA, we're getting closer to the PDUFA date, and we're going through the things you think you would be going through at this point, late-stage in the review process. So there's nothing that we see that gives us concern about the government shutdown, that could change, but at least where we sit today, nothing that we see.

And John, as far as payer landscape, we are in a really great spot with payers with ORLADEYO, and we expect the peds indication to slide right into that. So nothing special on the payer front. As far as the bolus of patients, we know that there's a lot of anticipation for this product. I'm sure we'll update you after we launch and get product into the market, we'll update you in 2026 as to the pace of patient growth.

The next question comes from Gena Wang with Barclays.

Wanted to ask about the Netherton syndrome also regarding the 12-milligram per kg IV dosing, by the way, very impressive biomarker data. I'm wondering what kind of safety you see in the patient -- in the healthy volunteer data? And then also, regarding the first quarter, the Part 3 data. So maybe if you can lay out what we should expect from this 1Q '26 data update from Part 3? And quickly, just housekeeping questions regarding ORLADEYO. I know you mentioned some of the comments, but I do wanted to double check with the actual numbers regarding the retention rate, are we still similar around 60% and the pay rate, I think last quarter, we talked about could be by year-end, 82% to 83%. Is that still the same? And then lastly is the patient segment, 50% switch from other prophy, is that still the same?

All right. So Bill, why don't you take the safety and the design of the Part 3? And then Charlie, you can take the ORLADEYO.

So there's -- really, the thing to say about safety in healthy subjects is that it's very safe so far, it's been very safe and well tolerated. So there have been no safety signals emerging with multiple doses of the drug through the dose that you mentioned. So that's really good news. I think that with regard to what you can expect from Part 3, this is very short-term administration of the drug in Part 3. We're at the cutting edge of clinical science and investigations into Netherton syndrome with a parenteral drug. So we'll be discovering how long it takes in order to get an effect. So I don't know that yet. Will that short-term administration be enough to see an effect? Don't know. If we do, that would be very encouraging. If we don't, we'll just give the drug for longer and maybe we'll increase the dose. So I think I would temper expectations with regard to what we might see from short-term dosing in a few subjects with Netherton. Obviously, we'll be looking at safety. So we'll learn a lot and look forward to extending the dosing in Part 4 of the study. The sorts of things that you would measure are pretty obvious, itch, pain, skin redness and the like.

And Bill, we're testing multiple doses in the Part 3. So we'll get that and start to zoom in on what we then want to look at Part 4. Is that right?

It's the first step for more extensive testing in Part 4.

Great. Charlie?

And Gena, as far as the ORLADEYO numbers, so yes, the patient retention rate is in line with exactly what we've seen over the last several years. So 60% of patients who start ORLADEYO make it to a year. And everything that we saw in Q3 tells us we're right on track with that same number. The paid rate, we ended Q3 at 82%, which is right about where we thought we would be. In Q4, I wouldn't be surprised if we end closer to 81%, even 80%. Typically, in the second half of the year, the paid rate starts to decline because we have all these new patients coming in and less of an opportunity to switch people from long-term free product to paid product. That opportunity comes in Q1 into early Q2 of the new year. And so we're right on track for where we need to be, and we expect to have a lot of those patients then switching to paid therapy earlier in 2026. And then as far as the source of business for patients, yes, the same basic trends where we get close to 50% of the people switching from other prophy history with other prophy products and then other patients switching from acute only coming over to prophy. And then a good number of patients, best we can tell, are starting ORLADEYO as their first HAE treatment ever because more of those are newly diagnosed patients.

Thank you. This concludes the question-and-answer session. I would like to turn the conference back over to Jon Stonehouse for any closing remarks.

Yes. We thought about ending the call with the rolling stones. This will be the last time, but thought different of it. But let me say this, it's been an honor to lead the employees of BioCryst for nearly the last 2 decades. Proud of what we built, what we've accomplished together and extremely excited and confident to see this team take the company into the future by delivering more and more innovative treatments for patients living with rare disease because in this industry, that's how you create real value. So thank you for your interest in our company and have a great day.

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.