BioCryst Pharmaceuticals, Inc. — Q2 2022 Form 10-Q
Reporting period: Three and six months ended June 30, 2022. BioCryst is a commercial-stage biotechnology company focused on rare diseases. Its principal marketed product is ORLADEYO for prevention of hereditary angioedema (HAE); it also sells RAPIVAB and peramivir.
Financial performance
| Metric | Q2 2022 | Q2 2021 | Six months 2022 | Six months 2021 |
|---|---|---|---|---|
| Total revenue | $65.5 million | $50.0 million | $115.5 million | $69.0 million |
| Net ORLADEYO product sales | $64.7 million | $28.4 million | $114.1 million | $39.3 million |
| Research and development expense | $62.0 million | $52.9 million | $127.4 million | $95.3 million |
| Selling, general and administrative expense | $38.0 million | $26.3 million | $72.3 million | $48.4 million |
| Operating loss | $34.7 million | $29.6 million | $84.7 million | $81.0 million |
| Net loss | $58.9 million | $43.2 million | $133.1 million | $107.5 million |
| Basic and diluted loss per share | $0.32 | $0.24 | $0.72 | $0.60 |
| Cash used in operating activities | — | $105.6 million | $86.4 million |
Financial position and liquidity
- At June 30, 2022, cash and cash equivalents were $272.6 million and current investments were $144.9 million; restricted cash was $1.4 million. Cash, cash equivalents and restricted cash totaled $274.0 million.
- Net working capital was $399.5 million, down from $462.4 million at December 31, 2021. Total assets were $510.5 million.
- Royalty financing obligations were $477.7 million. The secured term loan had a $144.5 million carrying value; the company reported $150.8 million of Term A principal including capitalized interest, before the effect of deferred financing costs.
- On July 29, 2022, after quarter-end, BioCryst drew the $25 million Term B and $50 million Term C loans. Net proceeds were $74.25 million after commitment fees; the credit facility matures December 7, 2025.
- Operating cash outflow was higher year over year. The substantial decrease in cash and cash equivalents from year-end also reflects purchases of investments; investing cash outflow was $135.9 million in the first half.
Changes versus the prior comparable period
- Revenue growth was driven by ORLADEYO. First-half ORLADEYO product sales rose to $114.1 million from $39.3 million.
- Comparisons were affected by prior-year items: Q2 and first-half 2021 included a $15 million Torii milestone for Japanese pricing approval, and 2021 included higher RAPIVAB and partner peramivir sales. Government contract revenue also declined as existing galidesivir contracts moved toward closeout.
- R&D and SG&A spending increased, reflecting investment in Factor D/BCX9930, BCX9250 and other development work, and the expansion of ORLADEYO commercialization and international operations.
- Interest expense rose to $47.9 million for the first half from $26.4 million, primarily because royalty financing obligations generated $39.4 million of non-cash interest expense in 2022.
Outlook, commentary and risks
- Management forecast 2022 net ORLADEYO revenue of $255 million to $265 million and full-year operating expenses of $390 million to $400 million, excluding non-cash stock compensation.
- Management said available financial resources were expected to fund operations for at least 12 months from the reporting date, while also expecting 2022 expenses to exceed revenue and continued operating losses and negative cash flows until revenue supports operations.
- BCX9930 enrollment had been paused after serum creatinine elevations and an FDA partial clinical hold. On August 4, 2022, the FDA lifted the hold; the company planned to resume enrollment at a reduced 400 mg twice-daily dose with revised protocols, hydration guidance and increased monitoring. Management noted that efficacy and safety at the revised dose remained uncertain.
- Royalty financing agreements divert portions of ORLADEYO and potential Factor D program economics to RPI and OMERS. The company also faces secured-loan covenants, including minimum liquidity requirements and U.S. ORLADEYO revenue tests following the Term C draw. BioCryst reported compliance with its credit covenants at June 30, 2022.
- Key risks include continued losses and potential future financing needs; clinical, regulatory and commercial uncertainty; dependence on a single U.S. specialty pharmacy and limited-source manufacturers; reliance on government contracts and partners; competition, reimbursement and pricing pressure; and effects of COVID-19, geopolitical events and foreign operations.
- The company reported no material COVID-19 impact to its financial condition, results or liquidity to date. It stated that disclosure controls were effective and that no material change in internal control over financial reporting occurred during the quarter.
Important facts for investors to verify
- Whether ORLADEYO sales growth supports the $255 million to $265 million 2022 forecast, including patient demand, retention, reimbursement and international commercialization.
- BCX9930 safety and efficacy at the reduced dose, the pace of trial enrollment and any further regulatory actions.
- Cash burn relative to available cash and investments, and the effect of the July 2022 borrowing on interest costs, covenants and liquidity.
- The scale and duration of royalty financing obligations and their impact on future product economics and interest expense.
- Progress and remaining funding under BARDA/HHS and NIAID/HHS contracts, as well as exposure to concentrated distribution and manufacturing arrangements.