BioCryst Pharmaceuticals, Inc. — Q3 2021 Form 10-Q
Reporting period: Three and nine months ended September 30, 2021. Financial amounts below are in U.S. dollars; statements report amounts in thousands unless noted.
Business context
BioCryst is a commercial-stage biotechnology company focused on rare diseases. Its portfolio includes ORLADEYO (berotralstat) for hereditary angioedema (HAE), BCX9930 for complement-mediated diseases, galidesivir, BCX9250, and peramivir products. ORLADEYO sales began in December 2020; the company sells it in the U.S. through one specialty pharmacy and works with partners in certain international markets.
Financial performance and liquidity
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Total revenue | $41.0 million | $6.1 million | $110.0 million | $13.8 million |
| Operating loss | $44.6 million | $42.9 million | $125.5 million | $122.4 million |
| Net loss | $58.8 million | $46.1 million | $166.3 million | $122.3 million |
| Net loss per share | $0.33 | $0.26 | $0.93 | $0.75 |
| Operating cash used | Not separately stated | Not separately stated | $109.7 million | $92.6 million |
- ORLADEYO net revenue was $36.7 million in Q3 and $76.0 million for the first nine months. Reported product sales were $39.1 million and $90.4 million, respectively. Cost of product sales was $0.6 million and $6.8 million; the filing does not provide a directly comparable product gross margin.
- Research and development expense was $50.0 million in Q3 and $145.3 million for nine months. Selling, general and administrative expense was $35.0 million and $83.4 million, respectively.
- Interest expense rose to $14.1 million in Q3 and $40.5 million for nine months. Nine-month expense included $24.1 million of non-cash interest on the ORLADEYO royalty financing obligation and $11.4 million related to the Athyrium term loan.
- Cash and cash equivalents were $199.6 million at September 30, 2021, down from $272.1 million at December 31, 2020. Restricted cash was $4.3 million; cash, cash equivalents and restricted cash together were $203.9 million. Net working capital was $119.1 million, versus $218.1 million at year-end 2020.
- Balance-sheet liabilities included a $142.1 million royalty financing obligation, a $132.1 million secured term-loan balance, and $30.0 million of current non-recourse notes payable. Separately, accrued interest payable was $25.6 million, associated with the defaulted PhaRMA Notes. Stockholders’ equity was a deficit of $147.0 million.
Material changes versus the prior comparable period
- Revenue growth primarily reflected ORLADEYO’s commercial launch. Nine-month revenue also included a $15.0 million milestone following Japanese reimbursement-list approval and higher RAPIVAB and peramivir sales.
- R&D spending increased, principally because of investment in BCX9930 and other research and development; spending on ORLADEYO development declined after its launch. SG&A increased to support the U.S. launch and international expansion.
- Q3 and nine-month net losses widened. Higher operating expenses and interest costs outweighed increased revenue. The prior-year nine-month results included an $8.9 million gain related to the Seqirus arbitration award; 2021 did not have a comparable gain.
- Q3 and nine-month SG&A included $0.7 million in severance and a one-time $7.0 million non-cash stock-compensation charge related to accelerated vesting of an executive’s options.
- Operating cash use increased year over year. The company’s cash balance declined despite $28.2 million of investment maturities and $12.3 million of financing proceeds, primarily from stock-based compensation plans.
Outlook, commentary, and key risks
- Management forecast full-year 2021 ORLADEYO net revenue of $115 million to $120 million, citing launch performance and expected fourth-quarter new-patient demand. It expected available resources, including the option to access an additional $75 million under the credit facility, to fund operations into 2023. The company also expected 2021 expenses to exceed revenue and continued operating losses and negative cash flows.
- BCX9930 had advanced to two pivotal PNH trials, with enrollment expected to begin in Q4 2021; a renal-disease proof-of-concept basket trial was also being prepared. Management reported BCX9930 was generally well tolerated in the completed PNH proof-of-concept study, while noting clinical development remains uncertain.
- The Athyrium facility has a December 2025 maturity. The company elected to capitalize quarterly interest payments in 2021; the loan’s stated rate was 12.17% at September 30. Additional $25 million and $50 million tranches are subject to conditions, including revenue milestones. The company reported compliance with credit-agreement covenants at quarter-end.
- The PhaRMA Notes remain outstanding and in default after their December 2020 maturity; their $30.0 million principal and $25.6 million accrued interest are reported. The notes are obligations of Royalty Sub and are non-recourse to BioCryst, subject to the pledged equity interest. Holders may pursue remedies against collateral, potentially affecting future Shionogi royalties and causing legal costs.
- The RPI royalty sale generated $125 million in 2020, but the related obligation produces substantial non-cash interest expense and directs a portion of qualifying ORLADEYO royalties to RPI. RPI also has specified rights to certain BCX9930 and sublicensing proceeds.
- Key risks include uncertainty in ORLADEYO uptake, reimbursement and pricing; clinical and regulatory outcomes for pipeline candidates; reliance on single-source manufacturers, distributors, and the U.S. specialty pharmacy; dependence on government contracts and procurement orders; future financing needs and debt covenants; and possible COVID-19-related disruptions. Management said COVID-19 had not materially affected financial condition, results, or liquidity to date, but impacts remained uncertain.
Important facts for investors to verify
- Whether ORLADEYO revenue and patient demand support the $115 million to $120 million 2021 forecast, including payer access, retention, and international launches.
- The timing, enrollment, safety, and efficacy milestones for BCX9930’s pivotal PNH trials and planned renal-disease study.
- Cash burn relative to the stated runway into 2023, and the conditions and availability of the additional $75 million in credit-facility capacity.
- The economic burden of the Athyrium loan and RPI royalty obligation, including PIK interest, repayment assumptions, and royalty-sharing effects.
- Potential consequences of continuing PhaRMA Notes defaults, including creditor remedies and effects on future Shionogi royalty receipts.
- Whether government funding and RAPIVAB orders continue, and whether supply-chain or single-customer concentration creates material operational or collection risk.