BioCryst Pharmaceuticals, Inc. — 2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. This annual filing reports full-year results, not a separate fourth-quarter summary. Amounts are in U.S. dollars unless otherwise noted.
Business context
BioCryst is a biotechnology company focused on rare diseases. Its principal commercial product is ORLADEYO (berotralstat), an oral preventive treatment for hereditary angioedema (HAE), approved in the U.S. and multiple international markets for patients aged 12 and older. RAPIVAB/peramivir is also approved, but the U.S. government stockpiling contract was effectively completed in 2022. Development programs include BCX10013, an oral Factor D inhibitor; other complement candidates; BCX17725 for Netherton syndrome; and avoralstat for diabetic macular edema.
Financial performance and position
| Metric | 2023 | 2022 |
|---|---|---|
| Total revenue | $331.4 million | $270.8 million |
| ORLADEYO revenue, including royalties | $326.0 million | $251.6 million |
| Operating expenses | $435.1 million | $419.3 million |
| Loss from operations | $(103.7) million | $(148.4) million |
| Net loss | $(226.5) million | $(247.1) million |
| Net loss per share, basic and diluted | $(1.18) | $(1.33) |
| Net cash used in operating activities | $(95.1) million | $(161.9) million |
- Revenue increased approximately 22% year over year, principally reflecting a $74.4 million increase in ORLADEYO revenue. Lower peramivir and other revenue, including the absence of 2022 HHS stockpiling sales, partly offset the increase.
- R&D expense declined to $216.6 million from $253.3 million, mainly following discontinuation of BCX9930 and BCX9250. SG&A rose to $213.9 million from $159.4 million, reflecting expanded commercial operations, headcount and international support.
- Interest expense was $108.2 million, including $70.4 million of non-cash interest on royalty financing obligations. A $29.0 million loss on extinguishment of debt arose from refinancing the Athyrium loans.
- Cash and cash equivalents were $110.6 million and investments were $278.3 million at year-end, totaling about $389.0 million, versus $442.4 million at year-end 2022. Net working capital was $346.0 million.
- Outstanding Pharmakon borrowings were $313.7 million including capitalized PIK interest; the balance-sheet carrying amount was $303.2 million after deferred financing costs. The loan matures April 17, 2028, bears floating-rate interest, and is secured by substantially all assets, subject to exceptions. Up to $150 million in additional tranches could be requested by September 30, 2024.
- Royalty financing obligations were $531.6 million at year-end, including $23.6 million classified as current. RPI and OMERS receive specified royalties or revenue shares tied principally to ORLADEYO; RPI also has rights tied to BCX10013.
- The company reported stockholders’ deficit of $455.5 million. Cost of product sales was $4.5 million; the filing does not present a company-wide gross margin measure that captures all operating costs.
Material changes and unusual items
- BioCryst replaced its Athyrium facility with a $300 million initial Pharmakon loan in April 2023, using most proceeds to repay the prior facility. Refinancing triggered the $29.0 million extinguishment loss.
- OMERS royalty payments began in October 2023. The Torii Japan agreement was amended in November: BioCryst took responsibility for commercial promotion, while Torii retains disease-awareness activities; the royalty structure now ranges from 20% to 80% of annual Japanese sales, subject to a threshold.
- Management revised forecasts for BCX10013 and ORLADEYO, changing the estimated effective interest rates on royalty financing obligations. The filing identifies development delays and reduced probability-of-success, pricing and market-share assumptions for BCX10013.
- A $1.5 million impairment and $0.4 million of contract termination fees related to cancellation of the Birmingham research-facility expansion were recorded in 2023.
- A January 2024 workforce reduction resulted in $3.4 million of severance and related costs accrued in 2023; a further $1.3 million of termination benefits was expected to be recognized in first-quarter 2024.
Outlook, commentary and key risks
- Management expects total 2024 expenses to exceed total 2024 revenue and anticipates continued operating losses and negative cash flows until revenue is sufficient to support operations. It believes resources available at year-end 2023 are sufficient for at least 12 months and reported no immediate plan to access capital markets or draw additional debt.
- BioCryst estimates ORLADEYO could reach a global peak of $1 billion in annual net revenue, with approximately 80% from the U.S. This is a management expectation, not formal near-term revenue guidance, and is subject to commercial, reimbursement and competitive risks.
- The company expects to report BCX10013 proof-of-concept data in 2024. If results are best-in-class, management plans to seek a partner for late-stage development and commercialization. A U.S. supplemental application for pediatric ORLADEYO use in ages 2 to under 12 is expected in 2025.
- Key risks include continued losses and possible future financing needs; substantial royalty and debt obligations; variable-rate debt and restrictive covenants; reliance on a single U.S. specialty pharmacy and limited suppliers; clinical and regulatory uncertainty; competition, reimbursement and pricing pressure; and intellectual-property, privacy and cybersecurity risks.
- Management identified a material weakness in financial-reporting controls related to insufficient accounting staff and inconsistent review of close processes. Management and the auditor concluded internal control over financial reporting was ineffective at December 31, 2023; the auditor issued an adverse ICFR opinion. The financial statement audit opinion was unqualified. Management reported remediating a separate weakness concerning review of manual journal entries, while work on the remaining weakness continues.
Important facts for investors to verify
- Whether ORLADEYO revenue growth, patient retention, reimbursement and international launches support management’s long-term peak-sales estimate.
- Progress and safety/efficacy results for BCX10013 and other pipeline programs, including any impact on partnership plans and royalty-financing estimates.
- Cash use, 2024 expense levels, and the assumptions underlying management’s liquidity assessment and “at least 12 months” funding statement.
- Pharmakon loan interest, covenant compliance, potential additional borrowing, maturity/refinancing plans and the effect of royalty payments on cash available to the company.
- Remediation and independent testing of the accounting-staffing control weakness; disclosure controls were also deemed ineffective at year-end.
- The effect of 2024 workforce reductions and whether expected cost savings or additional costs differ from management’s estimates.