BioCryst Pharmaceuticals, Inc. — Q1 2023 Form 10-Q
Reporting period: Three months ended March 31, 2023; comparison is with the three months ended March 31, 2022. BioCryst is a commercial-stage biotechnology company focused on oral medicines for rare diseases. ORLADEYO, its principal commercial product, is approved for hereditary angioedema (HAE) prevention; RAPIVAB is approved for influenza treatment.
Financial performance and position
| Metric | Q1 2023 | Q1 2022 / prior date |
|---|---|---|
| Revenue | $68.8 million | $49.9 million |
| Operating loss | $28.4 million | $50.0 million |
| Net loss | $53.3 million; $0.28 per share | $74.2 million; $0.40 per share |
| Operating cash flow | $(47.5) million | $(77.8) million |
| Cash and cash equivalents | $155.1 million | $304.8 million at Dec. 31, 2022 |
| Investments | $246.5 million, including $243.0 million current | $137.6 million total at Dec. 31, 2022 |
| Debt and royalty financing obligations | $232.5 million secured term loan carrying value; $514.4 million royalty financing obligations | At March 31, 2023 |
Revenue was primarily ORLADEYO: $68.4 million, comprising $60.8 million in U.S. revenue and $7.6 million outside the U.S. Cost of product sales was $0.9 million. Research and development expense was $48.4 million, selling, general and administrative expense was $47.9 million, and interest expense was $27.4 million. The filing does not present a gross-margin measure.
Total cash, cash equivalents and investments were approximately $401.6 million at March 31, 2023, compared with approximately $442.4 million at year-end 2022. Net working capital was $405.7 million. The company reported a stockholders’ deficit of $328.3 million.
Changes versus the prior comparable period
- Revenue increased 38%, driven mainly by ORLADEYO, whose reported revenue rose to $68.4 million from $49.7 million.
- Operating loss narrowed by $21.5 million. R&D expense fell $17.0 million, principally following discontinuation of the BCX9930 and BCX9250 programs in 2022.
- SG&A increased $13.6 million as the company expanded its U.S. commercial team and international operations.
- Net loss improved by $20.9 million, though interest expense rose $3.6 million, largely reflecting additional Athyrium borrowings made in 2022.
- Operating cash use decreased by $30.3 million. Cash, cash equivalents and restricted cash declined $149.6 million during the quarter, principally reflecting net investment purchases and operating cash use.
Outlook, developments and risks
- Management expects 2023 expenses to exceed 2023 revenue and anticipates continued operating losses and negative cash flows until revenue supports ongoing operations. It believes available financial resources are sufficient for at least the next 12 months.
- Management estimates the global ORLADEYO market could reach $1 billion in annual peak net revenue, with 70%–80% expected from the U.S.; this is a potential market estimate, not formal near-term revenue guidance. Q1 ORLADEYO revenue was slightly below Q4 2022, which management attributed primarily to first-quarter payor reauthorizations and patient-assistance and cost-sharing dynamics.
- On April 17, 2023, after quarter-end, BioCryst entered a Pharmakon loan agreement with $450 million of committed capacity and drew $300 million. Proceeds repaid approximately $241.8 million of Athyrium debt; approximately $26 million of net proceeds remained for general corporate purposes. The five-year loan bears interest at three-month SOFR plus 7.00%, subject to a 1.75% floor, and matures in 2028. Up to $150 million of additional tranches may be requested, subject to conditions. The loan has no scheduled amortization and includes restrictive covenants.
- Royalty financing obligations were $514.4 million at quarter-end and accrue substantial non-cash interest; reported effective rates were 22.4% for the 2020 RPI agreement, 13.1% for the 2021 RPI agreement and 10.6% for OMERS. OMERS royalty payments are scheduled to begin in Q4 2023.
- BCX10013 clinical development is delayed following dose-related observations in an ongoing nonclinical study. Separately, the company reported initial Phase 1 data showing more than 97% alternative-pathway suppression 24 hours after a single 110 mg dose and said the drug had been safe and generally well tolerated at doses studied to date.
- Key risks include continued losses and potential future financing needs; ORLADEYO adoption, reimbursement and dependence on a single U.S. specialty pharmacy; reliance on third-party manufacturers and vendors; clinical and regulatory uncertainty; royalty-sharing burdens and debt covenants; and competition. The company also disclosed that the PhaRMA notes remain in default, with potential recourse against collateral and future Shionogi royalties, though the notes are non-recourse to the parent company.
- The RAPIVAB U.S. procurement contract was effectively completed, with 49,980 of 50,000 doses delivered; government funding for galidesivir had expired. Management reported effective disclosure controls as of March 31, 2023.
Important facts for investors to verify
- Whether ORLADEYO prescription growth, patient retention, international launches and reimbursement support the company’s long-term sales expectations.
- The terms, interest cost, covenant compliance and available borrowing conditions under the Pharmakon loan, and the company’s cash runway after the refinancing.
- How royalty payments to RPI and OMERS affect future ORLADEYO cash flows, and whether sales-based estimates change the carrying value or interest expense of royalty financing obligations.
- The timing and outcome of BCX10013 follow-up work and other pipeline programs, including whether additional study findings change development plans.
- Potential inventory obsolescence, given the $1.4 million inventory reserve, and the company’s reliance on single-source manufacturing and U.S. distribution arrangements.