BioCryst Pharmaceuticals (BCRX) caught my eye recently because of the company advancing an oral factor D inhibitor into the clinic – BCX9930. Complement inhibition is an area of interest for me and I’ve recently written an article on Achillion Pharmaceuticals (ACHN) which is currently ahead of BioCryst’s BCX9930. However, BCX7353 is BioCryst’s main asset right now and the company is about to report phase 3 results in hereditary angioedema (prophylaxis) this quarter. I’ve done a good amount of research on BCX7353 and have decided to write this article, but without taking a position ahead of phase 3 results. I have concerns about the outcome and the stock could decline even if the study reports positive results. I also will outline a few scenarios where I would be a buyer, and that includes BioCryst trading higher if BCX7353 phase 3 results are positive. I also will share preliminary thoughts on BCX9930, the above-mentioned factor D inhibitor which should have some clinical de-risking in late 2019 (albeit in healthy volunteers).
BioCryst’s history in HAE drug development
Hereditary angioedema ("HAE") is a rare, debilitating and potentially fatal genetic condition that occurs in approximately 1 in 50,000 people. Symptoms include recurrent episodes of edema in various locations – hands, feet, face, genitalia, and airway. Airway swelling is particularly dangerous and can lead to death by asphyxiation.
BioCryst notes that by inhibiting plasma kallikrein, its drug candidate suppresses bradykinin production. Bradykinin is the mediator of acute swelling attacks in HAE patients.
BioCryst lost 90% of its value in the July 2015 – February 2016 period. Part of the value destruction was driven by the vicious biotech bear market, but the bulk of the loss came after the failure of avoralstat, the company’s first-generation kallikrein inhibitor, in a phase 2/3 study in hereditary angioedema. The trial had three arms, one placebo, and two avoralstat arms, and both avoralstat arms failed to show a treatment difference compared to placebo. What BioCryst learned from that study is that avoralstat’s exposure in patients was insufficient despite three-times-daily dosing and the company proceeded with the development of the next-gen product BCX7353.
BCX7353’s phase 2 results and issues
BCX7353 is BioCryst’s second-generation HAE compound for the prevention of HAE attacks (prophylaxis), and it's also being developed as a therapy for acute HAE attacks. BCX7353 has significantly improved bioavailability compared to avoralstat and can be dosed once daily.
BCX7353 was successful in a phase 2 prophylaxis study. In total, 75 subjects were randomized to receive several doses of BCX7353 and 22 subjects received placebo for four weeks. The qualifying attack rate was approximately one per week. Subjects recorded angioedema symptoms in a diary and diary records were reviewed and attacks adjudicated by an independent expert group. The primary endpoint of the trial was the rate of HAE attacks. The results:
- The 125mg dose showed a statistically significant benefit for all attacks – a 74% reduction in weeks 2-4. The 125mg dose also showed statistically significant and similar benefit for both abdominal and peripheral attacks.
- For 250mg and 350mg doses, there was no statistically significant effect for abdominal attacks despite strong and statistically significant effects on peripheral attacks. The company noted that the likely reason was that these two arms recorded transient drug-related abdominal adverse events as HAE attack symptoms in their diary.
- The 62.5mg dose showed no statistically significant differences in attack rates compared to placebo.
- BCX7353 was generally safe and well tolerated. There was one serious adverse event of moderate gastrointestinal infection that was determined by the investigator not to be drug related. The most common treatment-emergent adverse events were common cold, headache, diarrhea, nausea, and abdominal pain. Gastrointestinal adverse events were more frequent in the 250mg and 350mg dose groups compared to placebo.
Source: BioCryst presentation
The results of the 125mg dose are adequate and promising – that type of attack reduction is what we want to see in the phase 3 study. But the other two, higher doses give me pause despite the justification for the lack of effect on abdominal attacks. As the company noted and as you can see in the presentation slide above, the 250mg and 350mg doses failed to show a treatment difference in abdominal attacks because they reportedly led to GI symptoms in patients that they wrote down as HAE attack symptoms in their diaries. The effects of the two higher doses on peripheral attacks were good and relatively consistent with the 125mg dose.
BioCryst took two BCX7353 doses to the phase 3 trial – 110mg and 150mg. It should be noted that 110mg in the phase 3 trial is equivalent to the 125mg dose in the phase 2 trial because the company changed the nomenclature after the phase 2 trial to express the doses in terms of the free base of the drug. The 150mg dose was not studied in the phase 2 trial and it appears BioCryst is trying to squeeze additional efficacy out of BCX7353 without causing GI adverse events that could be considered as symptoms of an HAE attack in the phase 3 trial.
BCX7353 phase 3 study and the clinical and commercial hurdles for success
APeX-2 is a phase 3, double-blinded, placebo-controlled, three-arm trial evaluating the above-mentioned two doses of BCX7353 (110mg and 150mg) once daily as a preventive treatment to reduce the frequency of HAE attacks. The trial completed enrollment in November 2018 and has enrolled 120 patients. The primary endpoint of the trial is the rate of attacks over 24 weeks of administration.
The length of the trial is the main difference compared to the phase 2 study – 24 weeks vs. four weeks and is the first (but minor) reason for my reluctance to start a position ahead of the results. I think BCX7353 is reasonably likely to work similarly at four weeks and 24 weeks, but we have no clinical data to back that claim.
The second difference in this study compared to the phase 2 study is the rate of attacks – approximately one per week in the phase 2 study and the minimum in the phase 3 study is one attack in 28 days (the company expects the average to be approximately two per month). That’s quite a difference in attack rates – the phase 2 trial enrolled more severe HAE patients.
On the positive side, the company took additional measures in the phase 3 study to make sure GI adverse events are not labeled as an HAE attack. Aside from dose selection, the company is teaching subjects and investigators about the issue – they weren’t aware of it when running the phase 2 study. The site investigator will contact the patient after each event, ask questions about the symptoms, what was the patient’s response, how long did the attack last and do they still have the symptoms. This should be less of an issue in the phase 3 study (driven by the combination of increased scrutiny of GI adverse events and dose selection), but it may still lead to some misrepresentation of abdominal drug-related adverse events as angioedema attacks.
The third reason for my reluctance to start a position ahead of phase 3 results is the commercial efficacy hurdle for BCX7353. While a 50% reduction in attacks (and perhaps even lower reduction) may be enough for clinical success, it may not be enough for the drug to have significant commercial success.
New subcutaneous treatment options are expected to be the most significant competitors to BCX7353. Takeda’s (NYSE:TAK) (Shire) Takhzyro, which is off to a strong start after receiving FDA approval last year, has delivered reductions in the 73% to 87% range in the phase 3 trial.
Source: Takhzyro label
Based on Takhzyro’s strong results, I do not believe that oral administration of BCX7353 would be sufficient for strong uptake if efficacy is inadequate. I believe BCX7353 needs to show attack reduction rates of at least 60%-65% to have commercial success and rates as close to Takhzyro’s (70%-75% or more) to become the market leader.
The phase 3 trial is powered to detect a treatment effect as low as 50%, so the trial may be deemed a clinical success but investors may not care and the stock may not trade higher on such results.
For the reasons stated above, I have decided not to start a position in BioCryst right now. I will wait for the phase 3 results before deciding whether to invest. I would be a buyer in the following cases:
- BCX7353 delivers a 75%-plus reduction in HAE attacks with acceptable safety. I would be a buyer up to $14-$15 per share. I believe this scenario is supportive of peak sales potential in excess of $1 billion a year. For example, Takhzyro is expected to achieve $1.5 billion in annual sales in the mid-2020s.
- BCX7353 delivers a 60$-70% reduction in HAE attacks with acceptable safety. I would be a buyer up to $9-$10 per share. I believe this scenario is supportive of annual peak sales in the $500 million to $1 billion range.
- BCX7353 delivers a 50-60% reduction in HAE attacks. I would be a buyer in the $5-6 range but only after the company is able to raise more cash (more on the financial situation in a bit). I believe this scenario supports the peak sales potential of a few hundred million a year (up to $500 million).
I'm not a buyer if the trial is a success but the reduction in attacks is below 50% (the trial is large enough to show a statistically significant difference even below 50%) and I'm not a buyer if the trial fails and the company is unable to raise cash but I would continue to follow the stock for the second asset – factor D inhibitor BCX9930.
I should mention that these are general and somewhat broad assumptions. Actual decisions on whether to buy or not to buy will depend on the totality of the reported data.
BCX7353 for acute HAE attacks
BioCryst also is developing a different formulation of BCX7353 for the treatment of acute HAE attacks. The company tested three dose levels (250mg, 500mg, and 750mg) of a liquid formulation given as a single oral dose for the acute treatment of HAE attacks in a phase 2 trial. In February 2019, BioCryst reported topline results showing a single 750mg dose was well tolerated and superior to placebo against the majority of efficacy endpoints along with a clear dose-response across three dose levels evaluated.
Source: BioCryst presentation
BCX7353 was generally safe and well tolerated with no notable differences to placebo. Based on the results, BioCryst plans to meet with the FDA this quarter and to start a phase 3 trial with the 750mg dose in the summer of 2019. The results are expected in second half 2020.
This is another reason for not taking a position – I don’t believe BioCryst is adequately capitalized at the moment, especially if BCX7353 fails, because additional financing options would be limited in that case. BioCryst ended 2018 with $121.6 million in cash and equivalents and the company guided for 2019 cash expenses in the $105-130 million range. The company also has access to $50 million in additional funding, but that’s tied to milestones, and the most important one is BCX7353 phase 3 trial success, of course. That’s why I titled the article as “make or break” for BioCryst, as I think the stock will drop 60%-70%, if not more, if BCX7353 is a complete failure and the company will only have enough cash to last through early 2020 or mid-2020 at best. I expect BioCryst will take advantage of positive BCX7353 phase 3 results to raise more cash.
A brief look at the rest of the pipeline
I remain very interested in the complement space and BioCryst recently announced that BCX9930, a factor D inhibitor of the alternative pathway, will enter the clinic and that phase 1 results are expected in Q4 2019. You can read more about factor D inhibitors in my article on Achillion Pharmaceuticals, and why I'm interested. And while phase 1 results will be in healthy volunteers, we will see the PK/PD data of BCX9930 and how well it inhibits factor D – the data should be very indicative of its potency, efficacy, and safety in patients. The data in non-human primates looks pretty good.
Source: BioCryst presentation
And finally, BioCryst intends to move BCX9250 into the clinic in second half 2019 for the treatment of FOP, a rare, severely disabling condition characterized by the irregular formation of bone outside the normal skeleton, also known as heterotopic ossification ("HO"). There are currently no approved treatments for FOP. BCX9250 is an ALK2 inhibitor that the company believes could be able to slow or prevent the progressive formation of bone in soft tissues – HO. BCX9250 reduced HO in an experimental model of ALK2-driven HO in laboratory rats, with up to 89% reduction in the volume of HO compared to controls.
As covered throughout the article – the main risk for BioCryst is BCX7353 failing in the phase 3 study. I believe the study’s failure would drive the stock significantly lower and create a very unfavorable financial situation for the company.
If BCX7353 is successful in the phase 3 study, its commercial success and shareholder gains (or lack thereof) will depend on the HAE attack reductions achieved in the trial (lower reduction rates equal lower commercial success).
Beyond the existing competition in the HAE market, there are other therapies in development:
- KalVista Pharmaceuticals intends to launch a phase 2 trial of an oral kallikrein inhibitor KVD900 for the treatment of acute HAE attacks in 2019.
- Attune Pharmaceuticals has an oral kallikrein inhibitor ATN-249 that may be developed as a treatment for HAE.
- CSL has an anti-factor XII monoclonal antibody (CSL312) in phase 2 development for HAE.
BioCryst may become the next investment in our Growth Stock Forum model portfolio, but only after the phase 3 results of BCX7353. I would be a buyer if the study is a success and the stock does not trade above certain levels (detailed earlier in the article). If BCX7353 succeeds in the prophylaxis trial, we have the acute treatment study results of the same candidate to look forward to in second half 2020 and BCX9930 may become an important asset for BioCryst in 2020 and the following years.
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Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in BCRX over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: I may initiate a long position in the next 72 hours only assuming phase 3 results of BCX7353 are reported in the next 72 hours (and as covered in the article, depending on the range of outcomes).