BioCryst Pharmaceuticals, Inc. — FY2012 Form 10-K
Reporting period: Fiscal year ended December 31, 2012. The filing also reports unaudited quarterly results, including Q4 2012. BioCryst is a development-stage biotechnology company focused on small-molecule drug discovery and development; it reported no product-sales revenue in 2012.
Key financial results
| Metric | FY2012 | FY2011 |
|---|---|---|
| Revenue | $26.3 million | $19.6 million |
| Operating expenses | $60.2 million | $69.2 million |
| Loss from operations | $33.9 million | $49.6 million |
| Net loss | $39.1 million | $56.9 million |
| Basic and diluted loss per share | $0.79 | $1.26 |
| Net cash used in operating activities | $37.4 million | $32.3 million |
- 2012 revenue comprised $14.0 million in BARDA/HHS peramivir cost reimbursements, $7.8 million in recognized deferred Mundipharma revenue, $3.3 million in Shionogi royalties and $1.2 million in other collaboration revenue. The Mundipharma recognition was noncash.
- Q4 2012 revenue was $4.1 million and net loss was $11.1 million, or $0.22 per share.
- Operating expenses fell year over year, including R&D expense of $51.5 million versus $57.2 million and G&A expense of $6.8 million versus $12.0 million. No conventional gross-margin measure is meaningful given the company’s development-stage and collaboration-based revenue mix.
- Cash, cash equivalents and investments totaled about $36.8 million at year-end; including restricted cash, the balance-sheet amounts totaled $37.1 million. Working capital was $24.8 million. Total assets were $57.4 million and stockholders’ equity was negative $0.5 million.
- Operating cash outflow increased despite the smaller net loss. Financing activities included $17.8 million of net common-stock proceeds; the company issued no new non-recourse notes in 2012.
Material changes and operating developments
- Revenue rose from 2011, primarily due to recognition of deferred Mundipharma revenue and Shionogi royalties; lower BARDA/HHS reimbursements partially offset the increase. Revenue remained well below 2010’s $62.4 million.
- The Phase 3 peramivir 301 trial was stopped for futility after interim analysis: the difference on the primary endpoint was small and the recalculated sample size exceeded the prespecified futility boundary. The trial identified no unexpected safety concerns. Further U.S. development was left pending discussions with BARDA/HHS and the FDA.
- BioCryst completed Phase 2 testing of ulodesine for gout and was seeking a partner to fund Phase 3; management said it would not proceed alone. In the 52-week extension, response rates were 45%, 47% and 64% at 5, 10 and 20 mg, versus 19% for placebo.
- BCX4161, an oral hereditary-angioedema candidate, was placed on FDA clinical hold over manufacturing requirements for compounded capsules. The company expected to start Phase 1 testing in Europe around the end of Q1 2013. BCX4430 remained preclinical, with proof-of-principle results reported in a yellow-fever model. BCX5191 was discontinued after regulatory concerns and inadequate antiviral effect at the tested low dose.
- A proposed $101 million all-stock acquisition of Presidio Pharmaceuticals was terminated by mutual agreement in November 2012.
Liquidity, debt, outlook and risks
- The December 2012 restructuring eliminated approximately 50% of the workforce, or 38 positions. Management forecast 2013 operating cash use of $22–$26 million and operating expenses of $25–$35 million, and targeted reductions of 30%–40% in cash use and 40%–60% in operating expenses versus 2012.
- Management estimated year-end cash and investments would fund operations into Q2 2014, or roughly 15–18 months. Extending operations substantially beyond mid-2014 was expected to require additional government funding, licensing proceeds, new capital, revenue, further spending reductions or restructuring.
- Royalty Sub had $30.0 million of 14% secured non-recourse notes payable, supported principally by Shionogi royalties and milestone payments. The interest reserve was exhausted; approximately $572,000 of interest was in arrears at year-end and had to be paid, with accrued interest, by September 1, 2013 to avoid default. Management expected 2013 royalties to cover the shortfall but said sufficiency was uncertain.
- The yen hedge generated a $749,000 2012 mark-to-market loss; $5.2 million of collateral was posted at year-end. Potential future premiums and collateral depend on exchange rates and could affect cash flows and reported results.
- Principal risks include continuing losses and financing needs; dependence on BARDA/HHS reimbursement and government decisions about peramivir; clinical, regulatory and manufacturing uncertainty; reliance on collaborators and third-party vendors; competition; and potential dilution from further equity issuance. The filing states that BARDA/HHS may audit costs or terminate its contract.
- The company reported no legal proceedings. The independent auditor issued unqualified opinions on the financial statements and internal control over financial reporting.
Important facts for investors to verify
- Outcome of FDA and BARDA/HHS discussions and any continued funding or development of peramivir after the failed 301 trial.
- Cash burn, runway and financing needs against the 2013 guidance, including whether the stated runway remains achievable.
- Whether Shionogi royalties cover the PhaRMA Notes’ arrears and scheduled interest, and the consequences if they do not.
- Progress on a ulodesine partnership and the timing and results of BCX4161 and BCX4430 development.
- Actual restructuring savings, remaining contractual commitments and any further workforce or program changes.