BioCryst Pharmaceuticals, Inc. — 2015 Form 10-K Summary
Business context and reporting period
Biotechnology company developing small-molecule drugs, with a focus on rare diseases. This is the annual report for the fiscal year ended December 31, 2015; it also presents unaudited quarterly results. The portfolio included FDA-approved RAPIVAB (peramivir), HAE candidates avoralstat and BCX7353, and investigational antiviral BCX4430.
Financial performance and liquidity
| Metric | 2015 | 2014 |
|---|---|---|
| Total revenue | $48.3 million | $13.6 million |
| Operating expenses | $87.7 million | $59.4 million |
| Operating loss | $(39.4) million | $(45.8) million |
| Net loss | $(43.0) million | $(45.2) million |
| Net loss per share | $(0.59) | $(0.68) |
| Net cash used in operations | $(13.1) million | $(38.6) million |
- Revenue growth was primarily associated with the $33.7 million Seqirus (SUL) RAPIVAB license payment, government reimbursements, and RAPIVAB-related revenue. Reported revenue included $39.6 million of collaborative and research-and-development revenue, $6.3 million of product sales, and $2.4 million of royalties.
- Research and development expense increased to $72.8 million from $51.8 million, chiefly reflecting increased HAE program spending. General and administrative expense rose to $13.0 million from $7.5 million.
- At year-end, cash and cash equivalents were $28.9 million, restricted cash $1.6 million, and investments $70.3 million; combined, these totaled $100.9 million. Receivables were $6.2 million and total assets $124.6 million. Net working capital was $1.5 million, down from $32.1 million in 2014.
- Current liabilities were $64.5 million. The $30.0 million non-recourse PhaRMA notes, bearing 14% interest, were classified as current and remained in default. The notes are obligations of Royalty Sub, secured principally by Shionogi royalty and milestone payments; default remedies could jeopardize BioCryst’s potential future benefit from those royalties.
- BioCryst reported a $1.1 million net gain on the foreign-currency derivative in 2015, compared with a $5.5 million gain in 2014. The derivative is not hedge-accounted, creating earnings volatility; no collateral was posted at year-end, but up to $9.8 million could be required.
Material changes and quarterly results
- Revenue increased by $34.6 million year over year, while operating expenses increased by $28.3 million. The operating loss narrowed by $6.3 million; the net loss narrowed by $2.2 million.
- Operating cash use fell by $25.4 million from 2014. Cash and cash equivalents alone declined $25.6 million during 2015; the company also held a larger investment balance.
- Unaudited fourth-quarter 2015 revenue was $4.6 million and net loss was $18.1 million, or $(0.25) per share. The second quarter reported net income of $4.9 million, primarily in a year with the SUL license transaction.
- R&D expense rose substantially, including $11.8 million for BCX7353, which entered Phase 1, and $27.8 million for avoralstat. BioCryst reported 73.4 million common shares outstanding at year-end.
Outlook, commentary, and key risks
- Management expected 2016 operating cash use of $55–$75 million and operating expenses of $78–$98 million; the expense outlook excludes equity-based compensation. Management expected available cash and investments to fund operations through mid-2017, but stated that continued operations substantially beyond then would require additional funding, partnering, government support, spending reductions, or other actions.
- RAPIVAB commercialization was licensed to SUL outside Japan, Korea, Taiwan, and Israel. BioCryst retained U.S. government stockpiling rights and responsibility for specified FDA post-approval commitments, including a pediatric study, and for certain Canada/EU regulatory work. The agreement provided a $33.7 million upfront payment, up to $12.0 million in regulatory milestones, and potential royalties.
- Avoralstat’s OPuS-2 results, announced after year-end on February 8, 2016, did not show a statistically significant reduction in attack rate versus placebo at either tested dose. The company discontinued the softgel formulation and planned to assess a new solid dosage form. This is a subsequent development, not a 2015 result.
- BCX7353 completed a Phase 1 healthy-volunteer study; the filing reported no serious adverse events, but drug-related rashes occurred in two of 50 multiple-dose subjects, including one grade 3 event. A Phase 2 HAE trial was expected to begin in 2016. BCX4430 remained in Phase 1; animal Ebola data were promising but do not establish human efficacy.
- Key risks include ongoing losses and dependence on external capital, government contract funding and reimbursement, clinical and regulatory uncertainty, partner performance, product commercialization and competition, manufacturing concentration, patent protection, and the PhaRMA default and currency hedge exposure. Management expected continued losses; the company had no history of sustained profitability.
- The filing reported no legal proceedings. The auditor issued unqualified opinions on the financial statements and internal control over financial reporting; management also concluded internal control was effective.
Important facts for investors to verify
- Cash runway assumptions and whether the stated mid-2017 runway remains achievable as development costs and government reimbursements change.
- Terms, status, and possible creditor remedies relating to the defaulted PhaRMA notes, including effects on Shionogi royalties and the currency hedge.
- Subsequent avoralstat formulation data and BCX7353 Phase 2 design, enrollment, efficacy, and safety results.
- RAPIVAB post-marketing and pediatric obligations, additional regulatory approvals, SUL sales, and any U.S. government stockpiling orders.
- Availability and terms of future financing, partnering, and government contract funding, including potential dilution from equity issuance.