BioCryst Pharmaceuticals, Inc. (BCRX) has reported that the Phase 1 trial of the oral treatment BCX4161 (with healthy volunteers) has met all objectives. The safety and kallikrein inhibition findings of the study provide strong support in moving the development to a Phase 2a file for treatment of HAE patients. The oral use of BCX4161 was found to be safe, and was tolerated well, with no major adverse events and other adverse events led to the creation of limited dosage. Tests of coagulation in the laboratories remained normal. The company said that a successful oral kallikrein inhibitor like BCX4161 for preventing HAE attacks has major implications for the treatment. If the treatment is effective, it will be a better option compared to androgens currently the main oral treatment because it has fewer side effects.
The Phase 2a clinical trial is expected to start in the last quarter of this year, and will test the administration of 400 mg of BCX4161 three times every day for 28 days in a random design. Approximately 25 HAE patients, prone to a high frequency of attacks (once a week), will be used, and the study is to provide proof of concept for the treatment strategy.
The market reaction
The stock price shot up by almost 50% on the announcement of these results, and then rose further 25% the next day. It is true that clinical trial data is often a major catalyst for the stock price for development stage biopharmaceutical companies, but, in this case, the market reaction seems to be a little extreme when you consider that this was a Phase 1 trial using healthy volunteers. The study only determined that the treatment was safe and patients tolerated it well. It also showed the drug-inhibited kallikreincauses dramatic swelling in patients with HAE, and can be potentially fatal if it happens near the airway. There is no doubt that the approach is sound because other companies working on HAE treatments such as ViroPharma (VPHM) and Dyax (DYAX) also use the inhibition of kallikrein as the basis of their treatments. We should be in a better position to judge the potential when the results of the phase 2 trial become available. The HAE treatment space is fiercely competitive but the treatments from the competition -- Cinryze, Berinert, Kalbitor, and Firazyr -- all have to be injected or infused. Being an oral treatment will give BCX4161 a competitive advantage, although the current formulation requires four pills to be taken three times daily, which may not be seen as being particularly convenient. BioCryst is currently working on second-generation oral kallikrein inhibitors that could ultimately create a significant presence in the market.
Second quarter finances
For the quarter, revenues declined to $821,000 compared to $4.2 million in the previous year because of a drop in reimbursable peramivir expenses. Research and development expenses declined from $12.8 million in the previous year to $11.7 million, primarily because of lower development expenses for peramivir and BCX5191, though this was offset by a $5.0 million non-cash charge connected with BioCryst's "PNP" licensing agreement.
The net loss for the quarter was $12.2 million ($0.23 per share) in comparison to a net loss of $12.3 million ($0.25 per share) for the previous year. Cash and cash equivalents amounted to $31.3 million at June 30, 2013, in comparison to the total of $28.9 million as of March 31, 2013 and a total of $37.1 million as of December 31, 2012. Operating use of cash for the quarter was $4.1 million compared to $8.1 million in the previous year. Net operating use of cash for the first six months of 2013 came to $13.0 million. Based upon current trends, BioCryst expects that 2013 net operating use of cash will be around $22 to $26 million. Tha company closed its public offering on August 6 at a price of $4.40 per share, which is expected to net around $18.5 million.
The future outlook
There is still a major obstacle on the road to success for BCX4161, and that is that the body absorbs very little of the active ingredient and gets rid of the rest. This means that patients need to take a lot of tablets often (four tablets three times a day) which is not particularly attractive. As for the other major product, Peramivir, the Phase 3 trial was terminated early by its independent data monitoring committee because it did not prove to be particularly effective. However, it has been developed with funding of more than $230 million from the Biomedical Advanced Research and Development Authority (BARDA) and it is reimbursed for expenses for the development process. The company should continue the development even if the chances of success are remote.
BCX4161 has a long way to go before it can expect FDA approval and it must be subsequently commercialized successfully. Equally, not much hope should be placed on Peramivir. Given the high risk nature of investment in this early stage biotech company, I would strongly recommend that you take advantage of the run-up in the stock price and take your profits.