On November 5, 2015 BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX) reported financial results for the third quarter ended September 30, 2015 (Filing, 8-K, BioCryst Pharmaceuticals, NOV 5, 2015, View Source [SID:1234508001]).

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"The completion of enrollment of our OPuS-2 trial of avoralstat and the successful outcome of the Phase 1 healthy volunteer study of BCX7353 have positioned both programs to reach important value creating events in 2016. We expect to initiate the APeX-1 (Angioedema ProphylaXis) proof of concept trial of BCX7353 in HAE patients and to report OPuS-2 results by early 2016," said Jon P. Stonehouse, President & Chief Executive Officer of BioCryst. "These oral kallikrein inhibitors have the potential to revolutionize HAE treatment, providing patients the ability to lead normal lives."

Third Quarter Financial Results

For the three months ended September 30, 2015, revenues increased to $11.0 million from $3.2 million in the third quarter of 2014. The increase was the result of higher levels of product and collaboration revenue associated with the sale of RAPIVAB (peramivir injection) and the Seqirus, formerly bioCSL, out-licensing transaction, as well as increased collaboration revenue associated with BCX4430 development as a medical counter measure for Ebola virus and other filovirus diseases.

Research and development (R&D) expenses for the quarter increased to $20.1 million from $13.0 million in the third quarter of 2014. The increase in 2015 R&D expenses was primarily due to the advancement of the Company’s hereditary angioedema (HAE) programs, and to a lesser extent, higher expenses associated with two discovery-stage rare disease projects.

Selling, general and administrative (SG&A) expenses for the third quarter 2015 increased to $2.7 million from $1.8 million in 2014. This increase was due primarily to the initiation of activities in preparation for commercialization of the Company’s HAE product candidates, and to a lesser extent, commercial expenses associated with RAPIVAB.

In the third quarter of both 2015 and 2014, interest expense was $1.2 million and related to non-recourse notes payable. In addition, a mark-to-market loss on our foreign currency hedge of $460,000 was recognized in the third quarter of 2015, compared to a gain of $4.1 million in the third quarter of 2014. These gains and losses resulted from periodic changes in the U.S. dollar/Japanese yen exchange rate and the related mark-to-market valuation of our underlying hedge arrangement. During the third quarter of 2015, we also realized a currency hedge gain of $108,000 from the exercise of a U.S. Dollar/Japanese yen currency option.

The net loss for the third quarter of 2015 was $14.6 million, or $0.20 per share, as compared to a net loss of $8.7 million, or $0.12 per share, for the third quarter of 2014.

Cash, cash equivalents and investments totaled $119.7 million at September 30, 2015, compared to $114.0 million at December 31, 2014. Net operating cash use for the third quarter of 2015 was $12.3 million, as compared to $8.0 million in the third quarter of 2014. Net operating cash use for the first nine months of 2015 was $28.1 million, as compared to $19.8 million for the 2014 period.

Year to Date Financial Results

For the nine months ended September 30, 2015, total revenues increased to $43.7 million from $8.2 million in the same period of 2014. The increase in 2015 was primarily due to revenue recognition of $21.7 million associated with the upfront payment from the Seqirus out-licensing transaction, RAPIVAB product revenue, and increased collaboration revenue associated with BCX4430 development.

R&D expenses increased to $53.7 million for the first nine months of 2015 from $33.3 million in the same period of 2014. The increase in 2015 expenses was primarily due to increased spending associated with the Company’s HAE development programs, and to a lesser extent, higher BCX4430 development costs and discovery activity on two rare disease projects.

SG&A expenses increased to $10.3 million for the nine months ended September 30, 2015 from $5.4 million for the nine months ended September 30, 2014. The increase was primarily associated with the initiation of a commercial organization in preparation for commercialization of the Company’s HAE drug candidates, unrestricted grants awarded to the U.S. and international HAE patient advocacy groups, as well as deal-related expenses associated with the Seqirus out-licensing transaction.

In the first nine months of 2015 and 2014, interest expense was $3.9 million and $3.7 million, respectively, and related to the non-recourse notes payable. In addition, a mark-to-market loss on our foreign currency hedge of $793,000 was recognized in the first nine months of 2015, compared to a gain of $732,000 in the same period of 2014. These gains and losses result from periodic changes in the U.S. dollar/Japanese yen exchange rate and the related mark-to-market valuation of our underlying hedge arrangement. We also realized a currency hedge gain of $1.7 million from the exercise of a U.S. Dollar/Japanese yen currency option.

The net loss for the nine months ended September 30, 2015 decreased to $24.9 million, or $0.34 per share, compared to a net loss of $33.5 million, or $0.52 per share, for the same period in 2014.

Clinical Development Update & Outlook

BioCryst recently announced that the OPuS-2 (Oral ProphylaxiS-2) clinical trial of avoralstat completed enrollment of approximately 100 HAE patients, and the Company expects to report results in early Q1 2016.

BioCryst also announced that the randomized, placebo-controlled, Phase 1 clinical trial of orally-administered BCX7353 in healthy volunteers successfully met all of its objectives. Oral BCX7353 was generally safe and well tolerated at all doses up to 500 mg once-daily for 7 days and 350 mg once-daily for 14 days in healthy volunteers, and no dose-limiting toxicity was identified. There were no serious adverse events (AEs) and most AEs were mild. The safety, tolerability, drug exposure and on-target plasma kallikrein inhibition results strongly support advancing the development program into the (APeX-1) Phase 2 proof of concept clinical trial of BCX7353 in HAE patients.

The APeX-1 (Angioedema ProphylaXis) Phase 2, four week dose ranging trial to evaluate the safety, tolerability, pharmacokinetics, pharmacodynamics, and efficacy of BCX7353 as a preventative treatment to reduce or eliminate attacks in HAE patients is expected to begin by early 2016, with results expected mid-2016.

On October 27, The Japanese Ministry of Health Labor & Welfare (MHLW) announced that BioCryst’s BCX7353 was one of six products designated under MLHW’s new "Sakigake" fast track review system. The Sakigake Designation System promotes R&D in Japan, aiming at early market availability for innovative pharmaceutical products. This designation provides for additional interactions with the regulatory agency in Japan (PMDA) from early development through filing, prioritized development and review, and introduction of the product as soon as possible to address a serious unmet medical need.

Financial Outlook for 2015

Based upon current trends, assumptions, and development plans, BioCryst expects its 2015 net operating cash use to be in the range of $8 to $18 million, upon adjusting the Company’s previously predicted range for the first nine months of operations and including the favorable impact of the Seqirus transaction. In addition, BioCryst continues to expect its operating expenses to be within the range of $75 to $95 million. Our operating expense range excludes equity-based compensation expense due to the difficulty in accurately projecting this expense, as it is significantly impacted by the volatility and price of the Company’s stock, as well as vesting of the Company’s outstanding performance-based stock options.