BioCryst Pharmaceuticals, Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024. Amounts below are in U.S. dollars; financial figures are in millions unless stated otherwise. BioCryst is a global biotechnology company whose marketed products include ORLADEYO for prevention of hereditary angioedema (HAE) attacks and peramivir products for influenza treatment.
Financial performance and liquidity
| Metric | Q1 2024 | Q1 2023 | Change / context |
|---|---|---|---|
| Revenue | $92.8 | $68.8 | Up 34.9%; growth was primarily from ORLADEYO and higher peramivir royalties |
| ORLADEYO revenue, including royalties | $88.9 | $68.4 | U.S. $80.0; outside U.S. $8.9 |
| Operating expenses | $107.2 | $97.2 | SG&A increased; R&D declined |
| Operating loss | $(14.5) | $(28.4) | Improved by $13.9 |
| Net loss | $(35.4) | $(53.3) | Loss per share $(0.17), versus $(0.28) |
| Net cash used in operating activities | $(53.7) | $(47.5) | Cash use increased, including from lower accounts payable and accrued expenses |
Cost of product sales was $1.3 million, approximately 1.4% of revenue; the resulting revenue less product cost was approximately 98.6%. This is not a full operating margin: the company reported an operating loss margin of approximately 15.6% and a net loss margin of approximately 38.1%.
At March 31, cash and cash equivalents were $84.3 million and investments were $252.2 million, for $336.6 million combined; restricted cash was another $1.8 million. Combined cash and investments were down from $389.0 million at year-end 2023. Current assets were $447.1 million versus current liabilities of $119.9 million.
Balance-sheet secured term loan carrying value was $308.5 million; the company reported Pharmakon borrowings of $318.7 million including capitalized payment-in-kind interest. Royalty financing obligations totaled $530.6 million, including $26.0 million classified as current. Q1 interest expense was $24.5 million, including $14.2 million of non-cash royalty-financing interest. Stockholders’ deficit was $476.2 million.
Changes versus the prior comparable period
- ORLADEYO revenue increased to $88.9 million from $68.4 million, driving most of the revenue growth. Other revenue increased to $3.9 million from $0.4 million, primarily reflecting higher peramivir royalties.
- R&D expense decreased to $46.5 million from $48.4 million, mainly due to lower Factor D program spending, including BCX10013. Spending increased on berotralstat life-cycle work, BCX17725 and other early-stage research.
- SG&A expense rose to $59.4 million from $47.9 million, primarily due to headcount and investment in U.S. commercial and international operations.
- Interest expense declined to $24.5 million from $27.4 million, while operating cash use increased by $6.2 million.
- Weighted-average shares outstanding increased to 206.1 million from 188.5 million.
Outlook, management commentary and risks
- Management said available financial resources are expected to fund operations for at least the next 12 months, and it had no immediate intention to access capital markets or draw additional debt. However, it expects 2024 expenses, including stock-based compensation, to exceed revenue and anticipates continuing operating losses and negative cash flows until revenue supports operations. This is not a quantified revenue or earnings forecast.
- Management estimates ORLADEYO could have a global peak annual net revenue opportunity of $1 billion, with approximately 80% from the U.S.; this is an expectation, not a guarantee or formal near-term guidance.
- Management said the BCX10013 proof-of-concept trial remained on track as of May 6, 2024, with a plan to partner or discontinue the program later in 2024. The company also reported that BCX17725 was expected to enter clinical development by year-end 2024 and avoralstat was planned for a DME clinical trial in 2025. These updates were made after quarter-end.
- Enrollment in the ORLADEYO pediatric APeX-P trial for ages 2 to under 12 was reported complete on May 6, 2024; the company expects trial data could support a 2025 label-expansion filing. Italy finalized reimbursement in February; Brazil approval was announced after quarter-end.
- The $300 million Pharmakon term loan bears a variable SOFR-based rate, had a 13.34% effective rate in Q1, and matures April 17, 2028. Three optional $50 million tranches could be requested by September 30, 2024. The debt is secured by substantially all company assets and includes restrictive covenants; the company reported covenant compliance at quarter-end.
- In January 2024, BioCryst announced a workforce reduction and postponed planned Discovery Center capital expenditures, which management said would help accelerate its path to profitability. Q1 included $1.3 million in additional one-time termination benefits; $1.5 million of previously accrued workforce-reduction costs remained unpaid at quarter-end.
- Disclosure controls were not effective at March 31, 2024 due to a continuing material weakness: insufficient accounting staffing to consistently perform financial-close review procedures. Management is working on remediation; the weakness was not yet remediated.
- Key risks include ongoing losses and potential future financing needs; reliance on ORLADEYO and a single U.S. specialty pharmacy; reliance on limited or single-source manufacturers and vendors; clinical, regulatory, reimbursement and competitive uncertainty; royalty obligations that reduce product economics; variable-rate debt and restrictive loan covenants; and the possibility that the internal-control weakness could impair timely, accurate reporting.
- The filing also describes continuing defaults under non-recourse PhaRMA Notes issued by a subsidiary and the possibility of creditor remedies against related collateral and future Shionogi royalties. The notes were written off in 2021; the filing does not identify a current recognized balance for them.
Important facts for investors to verify
- Whether ORLADEYO U.S. and international sales, patient retention, reimbursement and royalty deductions support management’s market expectations.
- Cash use, available liquidity and progress toward profitability, particularly given the company’s stated expectation that 2024 expenses will exceed revenue.
- Debt terms and covenant compliance, including the variable interest rate, potential optional tranches, and the impact of royalty financing obligations on future cash flows.
- BCX10013 partnering or discontinuation plans and the timing and results of BCX17725, avoralstat and pediatric ORLADEYO development.
- Whether management completes and tests remediation of the material weakness in financial reporting controls.
- The status and potential financial effect of the PhaRMA Notes default and any resulting claims on subsidiary collateral or future royalties.