BioCryst: H1N1 Antiviral Partner Gets Fast Tracked for Japanese Review

BioCryst Pharmaceuticals (NASDAQ:BCRX) is the developer of peramivir, the intravenous antiviral I wrote about Tuesday that had a remarkable 90% cure rate for the sickest H1N1 swine flu patients.
The company's Japanese partner, Shionogi Pharmaceuticals, successfully completed Phase III trials of peramivir earlier this year, and filed for Ministry of Health approval in early November. This was the first application for marketing approval of peramivir in any country and a significant landmark for BioCryst, triggering a $7 million milestone payment.
So far, the Japanese regulatory system has moved very rapidly, from the quick completion of the Phase III trials to the speedy filing of the New Drug Application. In about 30 days from filing, the Ministry of Health (the Japanese equivalent of the U.S. Food & Drug Administration) has just granted Priority Review for Shionogi's application. In the U.S., the normal FDA review time is 10 months, and fast track review is six months. In Japan, Priority Review does not have a specific deadline, but in the past approvals have been granted in two-and-one-half to six months. There has been no English-language press release on this from either BioCryst or Shionogi.
Shionogi conducted its Phase III trials for both hospital and outpatient use, while BioCryst is now conducting two Phase III trials in hospitals only. Consequently, Shionogi will serve a much larger market. The company has said that they expect about $54 million in sales in hospitals, and also that they expect to have about three million outpatients a year. In the U.S., a single dose of peramivir is priced at $450, which would value their outpatient market projection at $1.35 billion. However, Shionogi has not yet discussed their pricing plans.
After the Japanese approval, I expect BioCryst to receive a $14 million milestone payment and double-digit royalties. BioCryst also will earn a manufacturing margin on sales of peramivir to Shionogi, until Shionogi begins producing the drug for itself, probably in late 2010 or 2011. By the end of December, BioCryst will have 120,000 courses (600,000 doses) of peramivir in inventory, so if Shionogi gets approval in January, BioCryst will be able to fill the initial orders around the peak of the Japanese flu season.
Peramivir costs about $77 per course of treatment to produce, or $15.40 a dose. Whether Shionogi prices a dose of peramivir at $450 or something less, the gross profit margin will be very high, as is typical of most biotech drugs.
About 200,000 people a year die worldwide from complications of the flu, creating a substantial in-hospital market. But hundreds of millions get the flu, and a new outpatient antiviral should serve a very large market worldwide, even as an intravenous infusion.
Disclosure: Long BCRX

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