BioCryst Pharmaceuticals, Inc. — Q1 2013 Form 10-Q
Reporting period: Three months ended March 31, 2013. Financial amounts below are in millions of dollars unless stated otherwise. BioCryst is a clinical-stage biotechnology company; it reported ongoing operating losses and negative operating cash flow.
Financial performance and liquidity
| Metric | Q1 2013 | Q1 2012 / prior date |
|---|---|---|
| Total revenue | $3.554 | $12.221 |
| Research and development expense | $7.411 | $15.525 |
| General and administrative expense | $1.382 | $1.697 |
| Operating loss | $(5.316) | $(5.001) |
| Net loss | $(4.506) | $(6.052) |
| Basic and diluted loss per share | $(0.09) | $(0.13) |
| Net cash used in operating activities | $(11.198) | $(12.248) |
| Cash and cash equivalents, quarter end | $14.805 | $20.891 at Dec. 31, 2012 |
| Investments, quarter end | $13.462 | $15.859 at Dec. 31, 2012 |
| Non-recourse notes payable | $30.000 | $30.000 at Dec. 31, 2012 |
Quarter-end cash, cash equivalents and investments totaled $28.267 million; the filing also cites $28.883 million of existing cash and investments for its liquidity outlook. The difference is not reconciled in the supplied filing text. Working capital was $24.1 million, versus $24.8 million at year-end. Total assets were $46.899 million and stockholders’ deficit was $2.840 million. No gross margin was reported.
Revenue included $1.924 million of peramivir royalties, $1.334 million of BARDA/HHS reimbursement, and $0.296 million of other collaborative revenue. The $1.957 million foreign-currency-derivative gain helped reduce net loss; the cash flow statement reverses the related fair-value change in reconciling operating cash flow. Interest expense was $1.180 million. Cash declined $6.086 million during the quarter.
Material changes versus the prior comparable period
- Revenue fell $8.667 million, primarily because Q1 2012 included $7.766 million of deferred Mundipharma revenue recognized when knowledge transfer was completed. BARDA/HHS revenue also decreased with lower peramivir development activity. Q1 2013 royalty revenue was $1.924 million, compared with none in Q1 2012.
- R&D expense decreased $8.114 million, reflecting the prior-year Mundipharma-related expense recognition and lower spending on peramivir, BCX5191, ulodesine and forodesine; spending on BCX4161 and BCX4430 increased.
- Operating loss widened by $0.315 million, despite lower expenses, as revenue declined. Net loss improved by $1.546 million, principally alongside a larger derivative gain: $1.957 million versus $0.038 million.
- Operating cash use decreased by $1.050 million year over year. Compared with Dec. 31, 2012, cash and investments declined, while current liabilities fell to $11.324 million from $17.224 million.
Outlook, commentary and key risks
- Management forecast 2013 operating cash usage of $22–$26 million and operating expenses of $25–$35 million. It expected available resources, including anticipated BARDA/HHS funding and other financing sources, to fund operations into Q2 2014; this is a forward-looking estimate, not a guarantee.
- In March 2013, BARDA/HHS issued a Stop-Work Order for peramivir, allowing only specified activities, including work supporting FDA requests and immediate milestones. The company awaited the agency’s post-review guidance on future funded work. BARDA/HHS reimbursement is an important revenue and cash-flow source.
- The peramivir Phase 3 301 trial in hospitalized influenza patients was terminated for futility after interim analysis. Separately, FDA meeting minutes received in April 2013 indicated the proposed NDA content could support a reviewable submission for acute uncomplicated influenza; a pre-NDA meeting was scheduled. Approval and the path forward remain uncertain.
- BCX4161 Phase 1 began in March 2013; management expected results in summer 2013. The company was seeking a partner for ulodesine Phase 3 development and did not plan to start that program without one. Mundipharma assumed future forodesine development costs under its worldwide license.
- The company reported $30 million of non-recourse PhaRMA Notes bearing 14% interest, secured primarily by Shionogi royalty and milestone payments. Approximately $572,000 of interest was in arrears at March 31, 2013. Those royalties generally support debt service and are not available for general operations before the notes are repaid.
- The yen/dollar hedge generated a quarterly mark-to-market gain and required $2.670 million of posted collateral at March 31. Potential annual payments of $1.950 million may arise from 2014 through 2020 under specified exchange-rate conditions; the hedge can also create earnings and cash-flow volatility.
- BioCryst had incurred losses and negative operating cash flows since inception and stated it would need additional funding or other measures to operate substantially beyond mid-2014. Risks include clinical and regulatory setbacks, reduced or terminated government funding, inability to secure partners or capital, dilution, and dependence on third-party manufacturers and collaborators.
Important facts for investors to verify
- BARDA/HHS’s formal decision on the scope and funding of peramivir work following its review, and any effect on reimbursement or cash runway.
- FDA requirements and timing for a peramivir NDA, given the prior Phase 3 futility result and the stated acute-uncomplicated-influenza submission pathway.
- Royalty receipts from Shionogi, the PhaRMA Notes’ arrears and debt-service status, and the availability of royalties for company operations.
- Progress and results for BCX4161, BCX4430 and ulodesine partnering efforts, alongside actual spending versus 2013 guidance.
- Financing needs, potential equity dilution and the reconciliation of management’s cited $28.883 million liquidity figure with the balance-sheet cash and investments totals.