BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX) Q2 2025 Earnings Call Transcript

BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX) Q2 2025 Earnings Call Transcript August 4, 2025

BioCryst Pharmaceuticals, Inc. beats earnings expectations. Reported EPS is $0.15, expectations were $0.03.

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

John D. Bluth: Thank you very much. Good morning, and welcome to BioCryst’s Second Quarter 2025 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, Jon Stonehouse; President and Chief Commercial Officer, Charlie Gayer; Chief R&D Officer, Dr. Helen Thackray; Chief Medical Officer, Dr. Donald Fong; and our new Chief Financial Officer, Babar Ghias. Following our remarks, we will answer your questions. 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. 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 posted in the Press Releases section of our Investor Relations website at www.biocryst.com.

I’d now like to turn the call over to Jon Stonehouse.

Jon P. Stonehouse: Thanks, John. Q2 was another outstanding quarter of performance for BioCryst. For ORLADEYO, it was the best quarter since approval, both from a revenue and underlying new patient demand perspective. To be in the fifth year of the launch and growing so sustainably quarter after quarter is a result of great execution by the team and continued growing confidence in the product. The commercial team at BioCryst has learned so much in the marketplace and made adjustments along the way that has kept this growth sustainable. Our recipe for success has been combining talented, motivated people, data and insights to very acutely understand the market and our customers and focused execution. We show up differently than our competition.

I know this as I saw it recently at the U.S. HAE Patient Summit, a gathering of over 1,000 patients and their families and many leading KOLs. They shared with me and other members of our team the growing confidence they have in our product. Many made the effort to seek us out and describe how ORLADEYO has changed their lives. This underscores when the product works for a patient, it works very well, and the number of patients experiencing both efficacy and convenience continues to grow steadily. There is little doubt that we are on a path to $1 billion at peak and market leadership with ORLADEYO. But to create even greater value, we need to do it again with another product. It’s clear that we must source our pipeline through both internal research and BD.

Our Netherton syndrome and DME pipeline programs remain on track to have some data by the end of the year. We also signed a definitive agreement to sell our European business to Neopharmed Gentili or NG, and we are working hard to complete all the necessary steps to close the deal in early October. This deal puts us in such a strong financial position, enabling us to pay off our term debt while generating an increasing operating profit margin. We believe it puts us on a path to generate more and more cash flow and that we will remain on this path through the rest of the decade and beyond. Pipeline progress and financial flexibility enable us to continue to advance our pipeline while looking for assets from other rare disease companies. We have built an outstanding commercial capability at BioCryst, and we plan to leverage it over time by bringing multiple products to the market to create greater and greater value.

Before I turn the call over to Charlie, I want to say how excited I am to see the company move to the next stage of growth, call it BioCryst 2.0. Charlie has built one of the most successful rare disease commercial engines ever, and now we are able to leverage this engine to become the consolidator of rare disease assets. We have built a great reputation through a track record of success, and now we have the financial strength to execute this strategy. So it’s time to change the leadership to execute the strategy and take the company to the next phase. After an extensive succession planning process assessing both internal and external candidates, it’s great to have our Board unanimously choose Charlie as our next CEO. I’ve seen Charlie grow as a leader for almost a decade now, and he has earned the job as the next CEO, and he is ready to lead the company.

I look forward to working with Charlie and the team in these remaining months to make this a smooth transition into the new year. With that, I will turn it over to Charlie.

Charles K. Gayer: Thank you, Jon. It’s an incredible honor to be chosen to lead this company, and it is not lost on me that I would not be in this position nor would BioCryst have reached this exciting point without your leadership. And thanks to all our colleagues who work so hard every day to bring transformative therapies like ORLADEYO to patients. You are making a big difference, and we are just getting started. And what a start it has been for ORLADEYO. We are halfway through year 5 since launch, and ORLADEYO continues to build momentum that is reaching a new level. The second quarter was the best ever for the U.S. with new patient prescriptions up over 10% above the first quarter of the launch in 2021 and over 15% above Q1 this year.

ORLADEYO revenue greatly exceeded our expectations, over $22 million above Q1 and 45% growth year-over-year, and it did so for several reasons. The spike in new patient demand, further efficiency in getting paid shipments, lower discontinuations during the first half of 2025 compared to last year, gross to net improvements and strong international results all contributed in roughly equal parts to generate the overperformance. Each of these factors was a direct result of our team’s continued focus on execution. With this strong second quarter, we are confident that we will reach the upper half of our revenue guidance of $580 million to $600 million for the full year, even after removing fourth quarter European revenue after closing the sale of our European business, which we anticipate in early October.

We expect to provide more detailed guidance on the go-forward BioCryst business at our third quarter earnings call in November. The spike in demand was only one component of the surge in revenue in Q2, but the prescription trend bodes particularly well for long-term growth. We saw an uptick in new U.S. prescribers with 69 compared to 59 in Q1, and existing prescribers continue to prescribe ORLADEYO to more of their patients. A big factor in the jump is the confidence physicians gain when they see our large volume of real-world evidence. For example, we recently released data showing that a large cohort of HAE patients with normal C1 inhibitor experienced substantial reduction in attack rates after starting ORLADEYO. This analysis of over 350 patients tracked for up to 18 months is helping physicians offer new hope for a segment of the HAE community that has struggled to get effective care for years.

There was a lot of excitement at the recent HAEA Summit because diagnosis and treatment of HAE with normal C1 inhibitor was a major part of the agenda as presenters described new consensus guidelines that were created in partnership with the patient community. U.S. payers reimburse ORLADEYO for normal C1 at a rate about 10% less than for type 1 and 2 patients, but our evidence generation and the expert consensus statements are helping to close that gap. Strong and consistent demand from type 1 and 2 patients, the increasing demand from patients with normal C1 inhibitor and the future pediatric demand from the anticipated FDA approval of ORLADEYO granules in December set us up to continue revenue growth momentum into 2026 and beyond. I’ll turn it back to Jon in his role as acting CFO for the second quarter to review the financials.

Jon P. Stonehouse: Thank you, Charlie. To make such positive and significant strides commercially while advancing our pipeline during the quarter is great to see. To be able to achieve all of that while continuing to improve our already strong financial position makes it even better. So let me walk you through the financials. While you can find the detailed second quarter financials in today’s press release, I’d like to draw your attention to a few items. Total revenue for the quarter came in at $163.4 million, $156.8 million of which came from ORLADEYO. Of that ORLADEYO revenue, $140.3 million or almost 90% was generated in the U.S. For ORLADEYO revenue, that represents 45% growth in quarterly revenue over the same quarter last year.

Non-GAAP operating expenses, excluding stock-based comp and deal-related costs were $106.4 million for the second quarter of 2025, up from $87.4 million in Q2 of 2024. Based on the investments we’ve made in the past, we’ve started to see strong operating leverage in our business. As you would expect, some of this increase was driven by continued investment in our R&D programs and details on expense drivers can be found in our press release. Non-GAAP operating profit for the quarter, excluding stock comp and deal-related costs, was $57 million, and our non-GAAP net income for the quarter was $32.3 million, resulting in a non-GAAP EPS of $0.15. We generated $45 million of cash in the second quarter before any debt prepayment. Based on the continued strength in our cash position, we paid down $75 million in principal from our term loan in April and an additional $50 million in July.

This reduces the balance of our term debt to $199 million, and our intent is to pay it off in full upon closing the sale of the European business in early October. The cumulative effect of these prepayments enables approximately $90 million of net interest savings over the life of the loan. Our accelerating cash flow generation enables us to reach an expected $700 million in cash by 2027. However, we don’t plan to sit on the cash, but to actively deploy it into value-creating opportunities. This strong financial performance alone represents great progress for the company. But to pair it with the commercial team firing on all cylinders and the great progress that we have made advancing our pipeline, it’s even more remarkable. This was a great quarter to conclude my brief stint as acting CFO, and I’m delighted to welcome Babar Ghias to the team as our new CFO.

Babar’s extensive deal-making and operational experience in addition to his previous roles as CFO at rare disease companies are exactly what we need at this time as we look to deploy capital and accelerate our path to sustainable growth and increasing value. I’ve been impressed with how quickly he’s gotten up to speed and integrated with the team. The growing financial strength of the business and the inorganic opportunities available present exciting prospects for BioCryst 2.0. With that, I will turn it over to Babar.

Babar Ghias: Thank you, Jon. To have achieved such a strong quarter and great progress in the last few months during your tenure as interim CFO is a testament to the amazing finance team that we have here at BioCryst. Their positive attitude and desire to make this company better have been evident to me immediately, and I’m excited to work with them. I am honored to be joining the BioCryst team at such a pivotal point for the company. The continued strength of ORLADEYO and the recently announced European business sale creates several value-enhancing options for BioCryst. It enables us to streamline our operating structure upon completion, improving our overall profit margins. Our plan to pay down our outstanding debt will further boost earnings from future interest expense savings.

And most importantly, our strong cash flow profile, combined with an unlevered balance sheet going forward, provides us the ability to deploy capital in building sustainable shareholder value, whether it’s in-licensing pipeline programs, product or company acquisitions or even return of capital to shareholders in the future. This next journey of BioCryst is going to be a very exciting one, and it’s great to be here. Operator, we’ll now open the call for Q&A.

Operator: [Operator Instructions] Our first question comes from Jessica Fye with JPMorgan.

Q&A Session

Unidentified Analyst: This is [indiscernible] on for Jess. Congrats, Jon, on your upcoming retirement, Charlie and Barbara on the new roles. I just have 2 quick questions. So first, of the 45% year-over-year ORLADEYO net rev growth, how much of that was volume and how much was better paid rate or net price? And then you mentioned an improved discontinuation rate for first half ’25 than first half ’24. What are the numbers you’re seeing there? And what do you think is driving that? And should we expect the trend to continue and why?

Charles K. Gayer: Yes. So for the growth in Q2, as I said in my prepared comments, it was a mix of everything from volume. There was some gross to net improvement. We were also just more efficient in squeezing out more paid shipments during the quarter. So it was a big mix of everything. But what I’m really excited about is the fact that the demand was so high because that’s what’s going to drive the long-term growth. And it’s — it was better than ever. And sorry, the second part of the question, can you repeat that part?

Unidentified Analyst: The second question or the second part of the first question?

Charles K. Gayer: Sorry, the second question.

Unidentified Analyst: Yes. So you mentioned an improved discontinuation rate for the first half of ’25. What numbers are driving that there? And do you expect to continue that?

Charles K. Gayer: So what we’ve seen over the last several years, and it’s true in the first half of this year as well is that the 1-year discontinuation rate has been rock solid. So 60% of patients who start make it to a year. That really hasn’t shifted. Where I think we’ve seen a little bit of an improvement as our patient base grows, the overall discontinuation rate is trending slightly down because patients who make it to a year, they’re doing really well, they stay on therapy. And so it’s exactly what you want to see, and I would expect to see this kind of same solid discontinuation or retention rate going forward.

Operator: Our next question comes from Laura Chico with Wedbush Securities.

Laura Kathryn Chico: My congrats to John, Charlie, Babar. So I guess I had just one — your comments on discontinuation rates made us a little curious here. Could you speak a little bit to persistency rates in relationship to other injectable prophylactic regimens? And I realize there’s probably no direct head-to-head studies, but wondering if you can comment here on any real-world data just that puts into context the persistency you’re now seeing with ORLADEYO versus the injectable products.

Charles K. Gayer: Yes. Thanks, Laura. We actually put out some data at a recent conference. I think it was last fall at the college meeting. We looked at health care claims data for both ORLADEYO for TAKHZYRO and HAEGARDA and looked at patients starting any of those 3 products. and looked at the 1-year persistence rate. And the 1-year rate is statistically identical for all of them, around 60%. Numerically, actually, ORLADEYO was a little bit better than the other 2. And so I think what that shows to us is no single HAE therapy is perfect for every patient. And we know that about 70% of patients would prefer to treat with an oral prophy product. So it shows that ORLADEYO has got the profile that patients want and performs really well in the real world.

Operator: Our next question comes from Steve Seedhouse with Cantor.

Steven James Seedhouse: Congratulations, Jon, Charlie, Babar, really everyone on the quarter as well. Two questions. First, any early indications of how the June and July approvals in HAE, so garadacimab and Ekterly are affecting ORLADEYO demand over the past month? And also, any additional color you can provide on the pediatric PDUFA delay just to give us comfort there.

Charles K. Gayer: Sure. On the new approvals, we just had by a substantial margin, the most new patient prescriptions ever. So what it shows is physicians aren’t waiting for any of these new products, which is exactly what our long-term market research has shown. ORLADEYO is the most differentiated prophy in the market, and I expect our demand to continue.

Jon P. Stonehouse: Yes. I think it’s important, too, to remember that we’ve told you patients don’t see their doctor much more than once or twice a year. So if they were going to have that conversation, they would have it set up, and we’re not seeing that. So I think that’s at least an early good sign for us. Do you want to take the pediatric?

Helen M. Thackray: Yes. And the question on the pediatric and the PDUFA date. So the FDA upon receiving some final reports and some responses that we gave them decided that they needed a little more time to review. So that’s a major amendment to the NDA, and that leads us to the PDUFA date of December 12. So we’re on track for that.

Jon P. Stonehouse: Yes. And we knew when we submitted the original filing that we had these reports that we had to get in. If we had waited for those, we would have virtually the same PDUFA date. So we thought we would take a shot at that. And we’re excited. The key is we’re going to get approval this year, and we’re excited about that. So…

Operator: Our next question is from Tazeen Ahmad with Bank of America.

Tazeen Ahmad: Congrats on a great quarter once again. I just wanted to maybe get a little bit of color on what you think your penetration rate is into the addressable market today? And where are you seeing most of your use? Is it more from doctors who’ve tried ORLADEYO, like the results and keep prescribing it? Or are you seeing an acceleration of new doctors coming on board to write scripts for the first time?

Jon P. Stonehouse: Charlie, you might want to talk too about pace because I think that’s an important piece that people might not understand.

Charles K. Gayer: Yes. Tazeen, from a penetration rate perspective, we’ve noted before at the end of 2024, about 3,000 patients had already tried ORLADEYO, roughly half of those are still on therapy. And recall that we’ve also put out data that there are about 11,000 diagnosed patients in the market. So we still have a lot of upside growth remaining. As far as health care providers, I was really thrilled that we had 69 new prescribers in Q2 this late in the launch. It shows that we keep finding and convincing more doctors. And the overall split of prescriptions tends to still be about 50-50 with about half of them being from Tier 1 physicians, the top 600 roughly that treat half the patients in the market. And then the other half comes from the wider base of other physicians who have just a few patients.

And what we’re seeing overall, and Jon mentioned this in his comments, I alluded to this as well is there’s just more confidence amongst physicians in the long-term data that they’re seeing the data that we present to them and then also what they experience themselves. And so they’re really thinking about ORLADEYO very differently than they were a few years ago, and they have confidence in putting switching patients, which is still roughly 50% of the patients. They’re confident in putting acute-only patients having them come over to prophy, start with ORLADEYO. And then patients naive to therapy as well. When they start on a prophy, ORLADEYO is the natural place. So we’re capturing all the segments.

Jon P. Stonehouse: Charlie spent a bit of time in his prepared remarks talking about normal C1 patients, and that is a real opportunity for us, a place that historically physicians have not had great success in either diagnosing or treating. And we’ve generated data, meaningful data, 350 patients worth of real-world evidence showing pretty amazing reductions in baseline attack rates on ORLADEYO with these patients. So those are examples of areas that the team just keeps scouring and finding, and that’s why you keep seeing this sustainable growth.

Tazeen Ahmad: And then just maybe to follow up, are you expecting that stickiness topic that has come up on several calls to continue as you add new patients, how reliable do you think they’ll be to stay on therapy if new potential — new oral competitors come online.

Charles K. Gayer: Sure. No, I think extremely sticky. You either do great on ORLADEYO and you stay on or you don’t and you move off. So I don’t think patients are not waiting for some hypothetical future oral product. They’ll switch today. They’ve got a lot of good injectable options. If they don’t get what they need from ORLADEYO, they’ll switch. And so I think the patients that stay are very sticky.

Jon P. Stonehouse: Yes. And the last thing I’d say is what would be better than a once-a-day highly effective drug, right? Like what behind us is coming that is better. There really isn’t a profile that’s better. So we expect it to be very sticky, as Charlie said.

Operator: Our next question is from Gena Wang with Barclays.

Huidong Wang: Also congrats on the strong quarter. So maybe Charlie and the team, if you can give a little bit more color regarding the launch metrics in 2Q regarding the reimbursement product rate, I think the last quarter was at 84%. And retention rate, I just want to confirm, is that consistent, stay at 60%? And if you can provide any other metrics regarding the patient segment. And then second question is regarding the timing for the 2 pipeline assets. I know you said that by the end of — by year-end ’25 for 2 pipeline assets. Maybe any additional color you can share regarding the patient enrollment and expectation for the data. Lastly, very quickly, I just wanted to ask, Jon, I know it’s — it has been great working with you. And I’m just wondering what’s the reason regarding the timing for transition to the next journey of your life?

Jon P. Stonehouse: Great. Charlie, do you want to take the first one?

Charles K. Gayer: Sure, Gena. As far as the launch metrics, I mentioned in my prepared remarks that we were able to — part of the overperformance in the quarter is we got more paid shipments out of our patient population than we have historically on a trend rate. So that was part of the overperformance. The actual paid rate is doing exactly what I predicted last quarter, which is we reached a high watermark around the April, May time frame when we come off of the reimbursement — sorry, the reauthorization season. And then for the rest of the year, the paid rate tends to be dominated by new patients coming in. What that means is it drifts down slightly over the course of the year by — we would expect it to go a percentage or 2 down by the end of the year, and we’re on that trend.

So we feel really good about where we are. Then next year, we’ll recover that and probably take the reimbursement rate to a new high. As far as retention, as I mentioned in the last question, it’s been really solid. So that 1-year 60% retention rate has been consistent for the last roughly 3 years. And it’s because patients they — as I said, they either do really well and they stay on or they move on to a different product.

Helen M. Thackray: And then with regard to the pipeline question, so we have 2 programs in the pipeline, both in the clinic that we’re progressing with data anticipated by the end of the year. They’re both progressing well on track for Netherton syndrome, our program is 17725, for which data this year will be both on exposure, the penetration of the drug in the skin and on potential efficacy endpoints, including itching and healing of the skin. So we anticipate having initial data for that drug for those endpoints by the end of the year. For avoralstat this is a trial in patients where one dose will give sustained exposure. We expect to have exposure over months. And so what we’ll be looking for is how patients do once they’ve had that single dose.

This is treating for DME. So we’ll be looking for effect on the retina and the potential for reducing the swelling in the retina. And as I said, its exposure over months, but we’ll be looking at 4 weeks, 8 weeks, 12 weeks in. So that initial data will be coming this year, too.

Jon P. Stonehouse: Great. And then in terms of timing for me, Gena, thank you, by the way. It’s been great working with you as well. It’s time. I don’t know how else to say it. I turned 65 this year. I’ve been in the company. It will be nearly 19 years when I leave. The company is in great shape. The Board and I have been working on this succession for over a couple of years, and Charlie is a great choice. So it all just kind of lined up, and it’s just perfect timing. So that’s my answer.

Operator: Our next question is from the line of Stacy Ku with TD Cowen.

Stacy Ku: A quick congratulations to both Jon and Charlie on the announcements. You both have done amazing things together with the BioCryst team. So a few questions. One quick follow-up. Just longer term, maybe remind us how you’re thinking about the on-demand launch of oral Ekterly as we think about — as we always had thought that would be a benefit for you all. So just help us understand, is the sales force able to maybe regrab share with patients that had to go back on injectables with ORLADEYO? Is that low-hanging fruit? And then from a payer perspective, how are they going to handle all this? So just maybe some more details there as we’ve been getting some investor questions. And then second, a little bit of just a double checking here.

As we think about the paid shipments in Q2, just want to understand, is there any implications on a quarterly basis, something that has come up with other companies. I just want to make sure there’s no changes to the normal quarterly cadence? And then last, we see the IND approval by the FDA for Netherton. So congratulations there. As we await data, just remind us the current competitive landscape there and what kind of learnings you are taking?

Charles K. Gayer: Sure. Thanks, Stacy. As far as the role of Ekterly, yes, we think patients are really excited. The ability to ultimately have an all-oral combination where you take an oral prophy and then when you have an occasional breakthrough attack, be able to treat it with an oral as well. It just adds to the convenience and for patients just being able to worry less and kind of forget that they have HAE. We saw that excitement at the HAE Summit last month. And so we do think it has — there’s a potential positive upside both in terms of attracting patients to ORLADEYO and for patient retention if they’re also taking — or using an oral on demand. What we definitely know from speaking to patients and physicians in large numbers is prophy is still the backbone of therapy that they’re looking for and in particular, oral prophy.

As far as paid ships in Q2, no, nothing that we’re seeing out of the ordinary. The improvements that we’re seeing is just about our team’s execution. And then I would expect for the rest of the year a similar quarterly cadence to what we saw last year, where the revenue growth slows down a bit relative to Q2 because we’re out of the reauthorization season. And so I would expect it to look quite similar with Q3 and Q4 growing according to our new patient demand.

Jon P. Stonehouse: And then with regard to the competitive landscape, I mean, it’s always hard to say stuff with any certainty. But Daiichi, we haven’t heard boo from their program in almost 2 years. And so that’s probably not a good sign. And we’ve heard that for business reasons, they’ve terminated. We don’t know if that’s true or not, we’ve heard that. And then BI had a program that I think they out-licensed or sold to a company. Usually, you don’t sell an asset if you have a lot of value and confidence in an asset. So that probably doesn’t bode well. So we — I mean, we could be the first therapy, which would be amazing because I think we were third or fourth even when we were first looking at this. But — and this is a place where the unmet need is huge, right? So — we’re really excited about it and eager to get the data to have a sense of dose and is it getting to the skin and is it having an effect. So stay tuned.

Operator: Our next question comes from Brian Abrahams with RBC Capital Markets.

Brian Corey Abrahams: Jon, congrats on all your career achievements, and congratulations as well to Charlie and Barbara on your new and upcoming roles. Two bigger picture questions for me. I guess, first, for most favored nation policy, how do you guys model that playing out and potentially affecting you guys, if at all, particularly with European pricing that’s no longer going to be under your control? Maybe remind us of your overall Medicaid exposure. And then secondly, you talked a lot on the — earlier in the call on deployment of capital. And I’m just I’m curious how you’re viewing the market for buyers here, how competitive it is, the types of opportunities that you might be interested in, in terms of stage and segment and your optimal timelines for executing on that?

Jon P. Stonehouse: Sure. So Charlie, do you want to take the first one and Babar will take the second.

Charles K. Gayer: So Brian, as far as MFN, obviously, like others, we’re watching this, but I don’t think we’ve seen anything specific that would apply to us. And so we’ll just keep executing and watching that space. Medicaid for us is a relatively small segment. It actually is sort of between 10% and 15% of our patients. So we’ll just watch. But right now, we don’t see an immediate impact.

Babar Ghias: And Brian, your next question, the market couldn’t be better for — if you’re a buyer at the moment and you don’t need to tap — raise more capital. And I think that’s what we — you heard from the remarks that we are in an enviable position of having sustainable cash flow. But let me give you a little bit more color. We will be broadly looking at the rare disease space. We want to be a consolidator of rare disease assets. So assets where we can — where there’s high unmet needs and we can leverage our operational infrastructure. We have a very promising early pipeline. So we will look to balance our portfolio with more later-stage assets post proof of concept, soon to be commercial and even commercial assets. So I think the next couple of months will be very interesting from that vantage point, and we’ll have some more developments over the next coming months.

Jon P. Stonehouse: Yes. And Brian, you know firsthand that companies are really struggling to find capital to fund their operations, whether it’s clinical development or launching a product. So it’s just a tough spot for people to be in and an opportunity for us.

Brian Corey Abrahams: Congrats on the strong quarter that put you in that position.

Operator: Our next question comes from John Wolleben with Citizens.

Jonathan Patrick Wolleben: Sharing our congrats to Jon and Charlie as well. I was hoping you guys could talk a little bit about typical second half push and pulls with like about $290 million in first half revenue. Not much has to go right for you guys to hit that lower end of your guidance. So wondering if you think kind of all the positive dynamics here in 2Q are going to continue or just a little bit about what you see typically second half and what you’re seeing so far this year.

Charles K. Gayer: Sure, Jon. Second half, as I’ve said, tends to be — it’s driven by new patients coming in. And it takes a little bit longer to get a new patient or the new patient population to the same paid rate as our overall population. And so therefore, number one, the overall paid rate tends to go down, will probably go down 1 percentage point or 2 in the second half. We don’t have the opportunity to bring a big bolus of patients from new prescription or from long-term free product over to paid the way that we do in the first quarter into early the second quarter. And so we expect those same dynamics for the second part of this year. And all signs show that our demand is going to continue to be really strong.

Jon P. Stonehouse: And the last thing that I’d say in terms of the dynamics is remember that the fourth quarter, we will not have European revenue. And we’ve guided you to what the trailing 12 months was in terms of the revenue that was being generated when we announced the deal. So you can add a little bit of extra for the fourth quarter because it’s usually a little bit higher. But that will give you some sense of what to deduct out of the fourth quarter revenue.

Charles K. Gayer: Yes. And Jon, you may have heard me say, but I did say in my comments, I expect us to be in the upper half of our $580 million to $600 million after subtracting European revenues in Q4.

Operator: The next question comes from Serge Belanger with Needham & Company.

Serge D. Belanger: Congrats on another strong quarter. Charlie, you mentioned a couple of factors behind the strength of ORLADEYO this quarter. You did mention an improvement in gross to net. So just curious if it’s still within that prior 15% to 20% range. And you also mentioned you hit a new high watermark in new patient adds. How does that compare to 2024 levels when I believe you added about 300 patients for the year? And then lastly, just given the overall expansion of the prescriber base and the strong patient add, is there a case here to add on to the current sales force to take advantage of the strength?

Charles K. Gayer: Sure. Thanks, Serge. As far as gross to net, yes, we’ve been really efficient this year. And some of that is just the mix with Medicare patients getting up to a higher paid rate as we talked about last quarter, and there’s a bunch of other factors as the team manages it. So I think we’re in the lower portion. We’re still in the 15% to 20%, but closer to 15% off of net price. And then as far as new patient adds compared to 2024, at the end of Q1, I did mention Q1 was a really good quarter this year, and it was last year was the best year we had since the first year of launch. Q1 was just a little bit better than the best quarter of last year. And then Q2 this year blew away Q1. So we’re doing really well on the new patient adds.

And then as far as the prescriber base and do we need more reps? No, we don’t. We have a fantastic team out there. They are able to cover the population. They’re able to expand the number of prescribers quarter after quarter. And actually, if we added more people, it would decrease our efficiency and probably just tick off our customers. So we’re not going to do that. And one thing that’s been great is we’ve been growing our revenue, but our actual direct commercial spends are hardly going up at all. And that’s because we’ve got the right data, the right message, the right team and they’re executing in a phenomenal way.

Jon P. Stonehouse: And kind of back to what Babar was saying about leveraging the existing infrastructure that we have. We have made investments in patient services and more data to be smarter about where we might find more physicians. But that we can use for any product in the future. And it’s not direct salespeople that you have to add. So that’s why we’re so convinced that putting more products into this well- oiled commercial machine is going to create greater and greater value.

Operator: Our next question comes from Maury Raycroft with Jefferies.

Unidentified Analyst: This is Amy, on for Maury. Congrats on the quarter. We have 2 questions on the pipeline programs, Netherton and DME. For the Netherton, what is your latest thoughts on the pivotal trial design and the regulatory timeline for this indication? Is there a defined pathway for accelerated approval either from precedents or clear KOL or FDA feedback? And for the DME program, like what would the outcomes from the Phase III study contribute to the design of Phase II or even the pivotal? And for the retinal swelling reduction results that we are expecting to see at the end of this year, what is the bar that we need to beat here?

Jon P. Stonehouse: Okay. So Helen, do you want to take the first one? Don, take the second one?

Helen M. Thackray: Yes. So on Netherton syndrome, the pivotal trial — so this is a really interesting program because it is one in which there is an unmet need. And there is — it’s a very serious disease, which means that it’s — you don’t need to see much effect and you don’t need to see it in many patients to demonstrate that the drug is going to be beneficial for patients. What we expect with 17725 is a very large effect. This is a potent drug with high affinity. It’s targeted drug and it’s intended to essentially provide a replacement of the missing enzyme function. So the pivotal trial design will be looking at what is the effect that matters to patients. What is the effect on an approvable endpoint. And we think that is changes in the skin, both how it’s healing, the assessment of the skin and the patient experience, the itching.

Those are relatively simple to measure. We’ll be looking at those in our current trial. We’ll be looking at those in a pivotal trial, and it’s possible this could be a very short path to pivotal. It’s possible also it could be then a short path to a registration endpoint and submission to the FDA. What that looks like and when it is, we can’t say at this point. We need to talk with FDA and get their input. We need to understand if they agree with us on the endpoints and the path. But we do think that this is a program that could warrant a smaller data set and a relatively simpler path to registration.

Jon P. Stonehouse: I think to the fact that, that competition question that came up earlier, if we’re first, we may be able to go really fast depending on what kind of treatment effect we have. So we’ll see. And then, Don, let me set up the DME and then you can hit the specifics. So just to remind you, what we’re trying to do is get a sense of do we have activity and do we have some sense of dose? And does kallikrein, plasma kallikrein play a role in DME as an alternative pathway to VEGF. Those are all questions we’re hoping to answer with a small investment in a Phase I study with a single dose in a handful of patients roughly. From there, we would make the next investment, which would be a proof-of-concept study and then ultimately to get approval. But if we’re able to prove that kallikrein plays an alternative role, and we have a drug that actually affects that, it’s off to the races for us. But I’ll let Don describe what we hope to see towards the end of this year.

Donald S. Fong: Yes. Thank you, Jon. I think that is correct. The kallikrein pathway is an independent pathway of the VEGF pathway. We just presented some preclinical evidence at the American Society of Retina Surgeons this last weekend, and there was a lot of excitement about a new pathway for our product. In answer to your specific question of what the pivotal study would look like, the path for approval of drugs for DME is best corrected visual acuity. So we will be looking for a similarity or noninferiority to existing anti-VEGF products. In our Phase II design, we will be looking specifically at change in central subfield thickness that will give us indication that the avoralstat product is effective at reducing central subfield thickness and macular edema.

Operator: [Operator Instructions] We have no further questions at this time. I would now like to turn the conference back over to Jon Stonehouse for any closing remarks.

Jon P. Stonehouse: Yes, I don’t think there’s a whole lot more to say when you have a quarter like we did, where you have growing revenue, profit, great cash flow, the start of great cash flow and strong underlying demand continuing to increase. It doesn’t get any better than that. And we’re going to continue to execute and looking forward to how the rest of the year unfolds. So thank you for your interest. Have a great day.

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