BioCryst Pharmaceuticals, Inc. — Form 10-Q Summary
Reporting period: Quarter and nine months ended September 30, 2022. BioCryst is a commercial-stage biotechnology company focused on rare diseases; its principal marketed product is ORLADEYO for hereditary angioedema (HAE). Amounts below are in U.S. dollars.
Financial performance and position
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Total revenue | $75.8m | $41.0m | $191.3m | $110.0m |
| Operating loss | $17.4m | $44.6m | $102.1m | $125.5m |
| Net loss | $42.5m | $58.8m | $175.6m | $166.3m |
| Net loss per share | $0.23 | $0.33 | $0.95 | $0.93 |
| Operating margin | (23.0%) | (108.8%) | (53.4%) | (114.1%) |
Operating margin is operating income or loss divided by total revenue. ORLADEYO product sales were $65.4m in Q3, up from $36.7m, and $179.5m for nine months, up from $76.0m. Management reported ORLADEYO revenue including royalties of approximately $66.0m for Q3 and $180.9m for nine months. Q3 RAPIVAB revenue included a $6.9m U.S. government stockpiling sale; nine-month revenue also benefited from that contract, while prior-year revenue included a $15.0m ORLADEYO Japan milestone.
Q3 research and development (R&D) expense was $52.7m versus $50.0m; selling, general and administrative (SG&A) expense was $36.9m versus $35.0m. For nine months, R&D was $180.1m versus $145.3m and SG&A was $109.2m versus $83.4m. Interest expense rose to $24.8m in Q3 and $72.6m for nine months, largely reflecting royalty financing and additional term borrowing. Nine-month interest expense included $57.8m of non-cash amortization on royalty financing obligations.
Cash and cash equivalents were $246.9m at September 30, 2022, and investments were $214.3m, for combined cash and investments of $461.2m; restricted cash was $1.4m. Combined cash and investments were approximately $514.4m at year-end 2021. Net working capital was $427.4m, down from $462.4m. Operating cash use was $138.0m for nine months, compared with $109.7m a year earlier. Investing activities used $205.5m, mainly reflecting investment purchases; financing provided $83.8m, including $73.1m net proceeds from term loans.
At September 30, current liabilities were $81.6m. The balance sheet reported a $223.9m secured term-loan liability and $489.8m in royalty financing obligations. Term-loan borrowings, including capitalized payment-in-kind interest, totaled $232.4m principal; the loan bears variable interest and matures December 7, 2025. Royalty financing arrangements require future payments tied to ORLADEYO and certain Factor D inhibitor revenues.
Material changes and business developments
- Revenue growth was driven primarily by ORLADEYO commercialization. Q3 total revenue rose about 85% year over year; nine-month revenue rose about 74%.
- Nine-month net loss increased despite higher revenue, as R&D, SG&A and interest costs rose. Q3 net loss narrowed year over year.
- BioCryst drew the $25m Term B and $50m Term C loans on July 29, 2022. The company stated it was in compliance with Credit Agreement covenants at quarter-end.
- Following a partial clinical hold and enrollment pause, the FDA lifted the hold on BCX9930 in August; the company planned to resume trials at a reduced dose with additional hydration and monitoring requirements.
- After quarter-end, on November 1, the company reported screening had begun for BCX9930 trials and expected data from about 15 newly enrolled patients by mid-2023. It also announced a BCX10013 clinical program, expected preliminary healthy-volunteer data in Q1 2023, and discontinuation of BCX9250 to redirect investment toward complement programs.
- HHS exercised its final RAPIVAB purchase option for 10,000 doses at approximately $6.9m. BioCryst expected government funding for galidesivir to expire in 2022 and said it had no plans to continue the program without such funding.
Outlook, risks and contingencies
For full-year 2022, BioCryst expected operating expenses, excluding non-cash stock compensation, of $365m–$370m, reflecting lower BCX9930 spending. It did not provide a specific revenue forecast in the filing. Management believed available financial resources would fund operations for at least 12 months, while also expecting 2022 expenses to exceed revenue and continued operating losses and negative cash flows until revenue supports ongoing operations. Management described a potential global ORLADEYO peak market of $1bn annually, with 70%–80% of peak revenue expected from the U.S.; this is an estimate subject to substantial uncertainty, not a near-term forecast.
Key risks include BCX9930’s renal safety signal and uncertain development timeline; reliance on one U.S. specialty pharmacy and limited third-party manufacturers; ORLADEYO market uptake, reimbursement and competition; ongoing losses and potential need for additional capital; variable-rate debt, restrictive covenants and minimum liquidity/revenue tests; and royalties that reduce future product cash flows. The company also identified clinical and regulatory uncertainty, government-contract closeout and audit risks, and potential disruption from COVID-19 and other external events. It said COVID-19 had not materially affected its financial condition, results or liquidity to date.
Investor verification priorities
- Track ORLADEYO prescriptions, patient retention, international launches, payer access and net sales against the company’s market expectations.
- Monitor BCX9930 safety and efficacy at the revised dose, enrollment progress and the timing and interpretation of the planned 2023 data; assess BCX10013’s emerging profile.
- Review cash burn, cash and investment balances, financing needs, and compliance with the term-loan liquidity and ORLADEYO revenue covenants.
- Assess the economic burden and repayment trajectory of the royalty financing obligations, including the effect of changing sales forecasts on recorded interest expense.
- Confirm the effects of galidesivir funding closeout, RAPIVAB’s final government order and the BCX9250 discontinuation on future costs and revenue.