BioCryst Pharmaceuticals, Inc. — 2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022; filed February 27, 2023. This is an annual report, not a standalone fourth-quarter report. BioCryst is a commercial-stage biotechnology company focused on oral medicines for rare diseases. Its principal commercial product is ORLADEYO for prevention of hereditary angioedema (HAE) attacks.
Financial performance and liquidity
| Metric | 2022 | 2021 |
|---|---|---|
| Total revenue | $270.8 million | $157.2 million |
| ORLADEYO net product sales | $249.7 million | $121.9 million |
| Operating expenses | $419.3 million | $334.9 million |
| Loss from operations | $(148.4) million | $(177.7) million |
| Net loss | $(247.1) million | $(184.1) million |
| Basic and diluted loss per share | $(1.33) | $(1.03) |
| Net cash used in operating activities | $(161.9) million | $(142.2) million |
- Revenue increased 72%, principally from a $127.8 million increase in ORLADEYO product sales. ORLADEYO-related royalties from Japan were $1.9 million in 2022, versus $0.7 million in 2021.
- Cost of product sales was $6.4 million, about 2.4% of total revenue. Operating loss was about 54.8% of revenue. These are simple ratios based on reported figures, not company-reported margin measures.
- Research and development expense rose to $253.3 million from $208.8 million; selling, general and administrative expense rose to $159.4 million from $118.8 million. Higher development spending and investment in U.S. and international commercialization contributed to the increases.
- Interest expense increased to $99.1 million from $59.3 million, including $76.5 million of non-cash interest from royalty financing obligations. The 2021 comparison included a $55.8 million gain from extinguishment of the non-recourse PhaRMA Notes; no comparable gain occurred in 2022.
- Year-end cash and cash equivalents were $304.8 million and investments were $137.6 million, including $119.5 million classified as current. Working capital was $411.0 million, down from $462.4 million in 2021.
- Secured term-loan borrowings, including capitalized interest, totaled $240.5 million at year-end; the balance-sheet carrying amount was $231.6 million. Royalty financing obligations were $501.7 million. Total stockholders’ deficit was $294.6 million.
- Cash, cash equivalents and restricted cash fell by $201.5 million during 2022. The company reported $73.1 million in net proceeds from additional credit-facility borrowing and $88.0 million of total net cash provided by financing activities.
Material changes and business developments
- ORLADEYO grew substantially in its second full year of U.S. commercialization. By January 2022, the company reported coverage by all major U.S. payors and national and regional pharmacy benefit managers. It also reported additional international approvals and partnerships.
- In December 2022, BioCryst discontinued BCX9930 after concluding, based on competitive data, that it was unlikely to be commercially competitive. R&D expense included costs to close out the program.
- BioCryst stopped BCX9250 development for fibrodysplasia ossificans progressiva (FOP), citing competing ALK-2 inhibitors and an estimated additional investment of approximately $100 million to advance BCX9250 to approval.
- BioCryst began a clinical program for BCX10013, an oral Factor D inhibitor. After year-end, the company reported encouraging initial Phase 1 results but also reported that dose-related nonclinical observations would delay the program.
- BioCryst delivered 20,000 RAPIVAB doses to the U.S. government in 2022, generating $13.9 million in revenue. Delivery of 49,980 of 50,000 contracted doses effectively completed the procurement contract. Government funding for galidesivir expired in 2022, and the company said it did not plan to continue the program without government funding.
Outlook, risks and unusual items
- Management said available financial resources were expected to fund operations for at least the next 12 months, but also expected 2023 expenses to exceed 2023 revenue and anticipated continued operating losses and negative cash flows until revenue can support operations.
- Management estimated ORLADEYO could reach $1 billion in global peak annual net revenue, with 70%–80% expected from the United States. This is a company estimate subject to substantial commercial and other uncertainties, not a near-term revenue forecast.
- BioCryst expected first-quarter 2023 ORLADEYO net revenue to be similar to, or slightly below, fourth-quarter 2022 levels, citing seasonal payer reauthorization and patient-assistance and cost-sharing dynamics.
- The Credit Agreement matures December 7, 2025, bears variable interest subject to a LIBOR cap plus a spread, and is secured by substantially all company assets. The final PIK-interest-eligible quarter was fourth-quarter 2022; quarterly interest payments are thereafter required. Covenants include minimum liquidity of generally $15 million and minimum U.S. ORLADEYO revenue tests. The company reported compliance at year-end.
- Royalty-sale obligations add material future claims on ORLADEYO and, under one agreement, potential BCX10013 revenue. OMERS payments were scheduled to begin in fourth-quarter 2023. Royalty-obligation valuation and interest expense depend on forecasts of future sales and payment timing.
- Key risks include ongoing losses and potential need for additional capital; clinical, regulatory and commercialization uncertainty; competition; reliance on third-party manufacturing and a single U.S. specialty pharmacy; payer coverage and pricing pressure; debt covenants and variable-rate interest; and intellectual-property, cybersecurity, privacy and supply-chain risks.
- Inventory valuation reserves increased by $0.9 million during 2022, primarily for short-dated or at-risk inventory. The PhaRMA Notes remained in default, but were non-recourse; BioCryst wrote off the related balance in 2021 and said the principal exposure was potential loss of future peramivir royalties and legal costs.
- The independent auditor issued unqualified opinions on the financial statements and internal control over financial reporting. The audit identified critical audit matters involving accrued clinical and manufacturing costs, royalty financing obligations and product-sales estimates; these were not separate audit opinions.
Important facts for investors to verify
- Whether ORLADEYO sales growth, patient retention, reimbursement and international commercialization support management’s peak-market expectations.
- The company’s cash burn, 2023 operating costs and funding runway, including any subsequent financing, collaboration or spending changes.
- Current debt balances, interest and covenant terms, liquidity-test headroom, and the amounts and timing of royalty-sale payments.
- The impact and timing of BCX10013’s nonclinical findings and program delay, and the commercial and financial consequences of discontinuing BCX9930 and BCX9250.
- Whether sales, inventory forecasts and payer deductions support the reported product revenue and royalty-financing estimates; the filing identifies these as areas involving significant estimation.