BioCryst: Good Candidate For Buyout, But Not For Anything Else

Summary

• BioCryst Pharmaceuticals, Inc. has one blockbuster potential marketed drug, but not much of a pipeline.
• Last year, they shelved two separate programs for different reasons.
• BioCryst Pharmaceuticals is cash rich and makes an ideal buyout candidate because of its uncomplicated business profile.
• Looking for more investing ideas like this one? Get them exclusively at The Total Pharma Tracker. Learn More »

Liia Galimzianova

My previous BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX) article was bearish on the prospects of its Factor D inhibitor BCX9930. That was in April, and I just saw today that many readers did not take kindly to my negative comments. 11 months later, it seems I was right - BCX9930 has been shelved by the company. I am not glad to have been right - far from it; because, like I have mentioned before, BCRX used to be an excellent stock for day trading before orladeyo's (berotralstat) approval, and I am grateful to the company/stock for that.

Speaking of orladeyo, this quarter's financial results show that despite orladeyo doing well in the market, the company's bottom line has been poor. Here's how orladeyo did:

…the company's revenue for Q4 2022 jumped ~68% YoY to $79.5M driving 2022 revenue ~72% YoY to $270.8M, mainly due to Orladeyo sales which stood at ~$70.7M and $251.6M for the quarter and full year, respectively.

However, speaking of relatively poor performance compared to the prior quarter, management noted:

Revenue in the quarter lagged our expectations slightly as we saw fewer paid product shipments based on seasonal factors and lower conversion from free to paid product than expected.

I will discuss the poor numbers later when I discuss financials, but the poor show resulted from high SG&A expenses caused by expenses for commercial activities, including orladeyo launch.

Orladeyo is potentially a $1bn molecule. It is a plasma kallikrein inhibitor "indicated for prophylaxis to prevent attacks of hereditary angioedema (HAE) in adults and pediatric patients 12 years and older." It is not approved for acute HAE attacks. At doses higher than the recommended 150mg dose, Qt prolongation may occur.

The efficacy and safety data of orladeyo, is given below for your reference:

Efficacy - "In the pivotal Phase 3 APeX-2 trial, ORLADEYO significantly reduced attacks at 24 weeks, and this reduction was sustained through 48 weeks. HAE patients who completed 48 weeks of treatment (150 mg) saw reductions in their HAE attack rates, from a mean of 2.9 attacks per month at baseline to a mean of 1.0 attacks per month after 48 weeks of therapy. In the long-term open label APeX-S trial, patients completing 48 weeks of therapy (150 mg) had a mean attack rate of 0.8 attacks per month."

Safety - "ORLADEYO was safe and well-tolerated in both trials. The most frequently reported adverse reactions in patients receiving ORLADEYO compared with placebo were gastrointestinal reactions. These reactions generally occurred early after initiation of treatment with ORLADEYO, became less frequent with time, and typically self-resolved."

Besides orladeyo, however, BioCryst's pipeline was nearly nonexistent, after BCX9930 was shelved. There's a second oral factor D inhibitor called BCX10013 which the company says is in early stages of development; there's not much else in the pipeline. There is RAPIVAB (peramivir injection), described as:

"an influenza virus neuraminidase inhibitor indicated for the treatment of acute uncomplicated influenza in patients 6 months and older who have been symptomatic for no more than two days."

However, it doesn't sell much. However, just recently, the U.S. Department of Health and Human Services (HHS) purchased the final $7mn tranche of a $34.7mn order for 50k rapivab doses for Strategic Preparedness and Response aimed to prepare for a potential pandemic influenza event.

Thus, currently, BCRX is almost a one-trick pony. However, for BCX10013, the company noted in November:

The company has begun a clinical program with BCX10013, a novel, potent and specific Factor D inhibitor, and expects to report preliminary data from healthy volunteers in the first quarter of 2023. The preclinical and early clinical profile from approximately 90 healthy volunteers to date suggests BCX10013 could have the properties of a once-daily oral therapy. A goal of the ongoing clinical program is to confirm this once-daily profile with healthy volunteer and patient data.

In January, the company announced preliminary data from this "ongoing phase 1 single ascending dose (SAD) and multiple ascending dose (MAD) trials in healthy volunteers show rapid, sustained and >97 percent suppression of the alternative pathway (AP') of the complement system 24 hours following a single 110 mg dose. BCX10013 has been safe and generally well-tolerated at all doses studied to date." In November, the company let go of another program - BCX9250 targeting an ultrarare disease called fibrodysplasia ossificans progressiva (FOP) - because, despite good data and regulatory designations and so on, the company thought it was way behind bigger competitors, and shelving the program would save it $100mn. As BCRX noted:

The company believes that patients with FOP, an ultra-rare disease, are likely to benefit from other oral ALK-2 inhibitors that currently are substantially ahead of BCX9250 in development. Considering the expectation that patients will be well-served by these other products, and the approximately $100 million in additional investment that would be required to advance BCX9250 to approval, the company is stopping the BCX9250 program and redirecting this investment to the other opportunities it has to serve patients with complement-mediated diseases.

Indeed, this is the same amount - $100mn - that the company says it saved after shelving the BCX9930 program. They decided to do this after seeing competitive data from rival companies. The company plans to focus its efforts on the next generation Factor D inhibitor BCX10013 now.

Financials

BCRX has a market cap of $1.63bn and a cash reserve of $444mn as of the previously reported quarter. Research and development (R&D) expenses for the fourth quarter of 2022 were $73.2 million while Selling, general and administrative (SG&A) expenses were $50.2 million. These results are considerably higher from the same quarter of the previous year, mainly due to increased trial and termination expenses, and orladeyo launch and commercialization support expenses.

There is also a much larger net loss from the same quarter of 2021, mostly because of a one-time $55.8mn cash gain related to the extinguishment of the non-recourse PhaRMA notes. Anyhow, with the shelving of the two trials, expenses will surely reduce. I think I can safely put 6 or 7 quarters as the cash runway, probably more if there's no additional clinical trial expenses.

Bottom Line

BioCryst Pharmaceuticals, Inc. has one valuable asset and a developing but early stage pipeline, and the company has a good deal of cash. There are currently no label expansion plans for the lead asset, as well. These sorts of focused companies are good candidates for buyouts. I don't see anything in the BioCryst Pharmaceuticals, Inc. pipeline that will merit as much market enthusiasm as a buyout. I think investors should keep that in mind if they are investing in BioCryst Pharmaceuticals, Inc.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within 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.