BioCryst Pharmaceuticals, Inc. — Q2 2021 Form 10-Q
Reporting period: Three and six months ended June 30, 2021. Financial amounts below are in U.S. dollars; amounts are converted to millions unless otherwise noted. The company is a commercial-stage biotechnology business focused on rare diseases.
Financial performance and position
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Total revenue | $49.96 million | $2.87 million | $69.02 million | $7.69 million |
| Operating loss | $29.58 million | $38.51 million | $80.96 million | $79.49 million |
| Net loss | $43.20 million | $38.61 million | $107.48 million | $76.21 million |
| Basic and diluted loss per share | $0.24 | $0.24 | $0.60 | $0.48 |
| Research and development expense | $52.87 million | $27.50 million | $95.31 million | $57.37 million |
| Selling, general and administrative expense | $26.33 million | $13.88 million | $48.44 million | $29.75 million |
| Interest expense | $13.50 million | $2.92 million | $26.40 million | $5.97 million |
- Revenue composition: Q2 product sales were $33.43 million, including $28.37 million of ORLADEYO, $4.62 million of RAPIVAB and $0.43 million of peramivir. A $15.00 million milestone was recognized after Japan’s NHI price-list approval for ORLADEYO. Six-month product sales were $51.30 million; royalty revenue was negative $0.77 million for the period.
- Cash flow: Net cash used in operating activities was $86.42 million for the first half, versus $54.32 million in 2020. Investing activities provided $19.18 million, and financing activities provided $7.47 million. Cash, cash equivalents and restricted cash ended the period at $214.66 million.
- Liquidity: Cash and cash equivalents were $210.31 million, investments $8.11 million, and net working capital $150.2 million. The company reported total current assets of $265.80 million and current liabilities of $115.60 million.
- Debt and financing: The balance sheet reported a secured term loan of $126.80 million, a royalty financing obligation of $136.86 million and $30.00 million of current non-recourse PhaRMA Notes. The secured loan’s reported balance is net of financing costs; borrowings including capitalized interest were $132.46 million. The Athyrium facility matures in December 2025, bears variable interest, and has up to $75 million of additional loans available subject to conditions.
- Equity: Stockholders’ deficit was $106.08 million at June 30, compared with a deficit of $19.26 million at December 31, 2020. Accumulated deficit was $1.13 billion.
- Margins: The filing reports cost of product sales of $0.30 million for Q2 and $6.22 million for the first half. Because reported product sales include several products and the filing does not present a directly comparable product-level cost breakdown, a representative overall product margin is not clear.
Material changes versus prior periods
- Revenue rose sharply following ORLADEYO’s December 2020 U.S. launch, additional RAPIVAB/peramivir sales, and the $15.00 million Japan approval milestone.
- R&D spending increased, primarily reflecting greater investment in BCX9930 and other research and development; spending on berotralstat/ORLADEYO development declined after the product launch. Q2 BCX9930 R&D expense was $26.51 million; first-half expense was $50.35 million.
- SG&A increased to support ORLADEYO’s U.S. launch and expanded international operations.
- Interest expense increased substantially following the 2020 royalty monetization and Athyrium borrowing. First-half 2021 interest included $15.60 million of non-cash interest on the ORLADEYO royalty financing obligation.
- First-half 2020 results included an $8.89 million gain related to the Seqirus arbitration award; the company reported slight foreign-currency expense in the 2021 periods instead. This prior-year item affects comparisons.
Outlook, commentary and risks
- Management provided no specific 2021 revenue or operating guidance during ORLADEYO’s launch period. It expects 2021 expenses to exceed revenues and ongoing operating losses and negative operating cash flows until revenue can support operations.
- Based on expected revenue and expenses, and the option to access an additional $75 million under its credit facility, management estimated that available resources would fund operations into 2023. Access to the additional loans is conditional; the runway is not a guarantee.
- ORLADEYO was approved in the U.S., EU, Japan and U.K. during the period and launched in Japan and Germany. The U.K. reimbursement decision was anticipated in Q4 2021. Commercial performance depends on prescriptions, patient retention, payer access and reimbursement, and partner execution.
- BCX9930 had advanced toward pivotal PNH studies; the company expected REDEEM-1 and REDEEM-2 to begin enrolling in the second half of 2021 and planned a renal-disease proof-of-concept study. These are forward-looking plans, not reported completed milestones.
- The PhaRMA Notes remained in default after their December 2020 maturity. At June 30, principal was $30.00 million and accrued unpaid interest was $23.87 million. The notes are obligations of a subsidiary and described as non-recourse, but holders may pursue remedies against collateral and the subsidiary’s equity, potentially affecting future Shionogi royalty receipts.
- Key risks include continued losses and possible need for additional capital; commercial uptake and reimbursement for ORLADEYO; clinical, regulatory and manufacturing uncertainty; reliance on third-party manufacturers and a single U.S. specialty pharmacy; government-contract funding and termination risks; debt covenants and variable interest rates; and potential COVID-19-related disruption. Management said COVID-19 had not materially affected financial condition, results or liquidity through the reporting date, while noting continuing uncertainty.
- Management reported effective disclosure controls as of June 30, 2021 and no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Whether ORLADEYO prescription growth, patient retention, payer coverage and net pricing support continued revenue growth, and how much sales are reduced by rebates and assistance programs.
- Whether BCX9930 pivotal trials start and progress as planned, and whether clinical results support the development strategy across PNH and renal indications.
- Whether the company maintains its projected cash runway, meets credit-agreement covenants, and can satisfy conditions for any additional borrowing.
- Developments in the PhaRMA Notes default, including any enforcement action and the effect on future peramivir royalties.
- How the ORLADEYO royalty financing obligation, including its estimated future payments and reported approximately 24% effective interest rate, affects future interest expense and cash available to the company.
- Whether government funding and RAPIVAB procurement continue, and whether supply-chain or single-source vendor risks affect commercial products or clinical programs.