2023-05-31 03:44:45 ET
Summary
- Today, we circle back on BioCryst Pharmaceuticals for the first time in nearly a year.
- The company's franchise drug continues to have consistent and impressive revenue growth and the company recently improved its balance sheet.
- Is BioCryst investment worthy yet? An updated investment analysis follows in the paragraphs below.
"Appearance blinds, whereas words reveal. "? Oscar Wilde
Today, we are putting BioCryst Pharmaceuticals, Inc. ( BCRX ) in the spotlight for the first time since our last article on this small biotech name back in early summer of 2022. We concluded that piece by saying more clarity was needed on BioCryst and that we would circle back on the story at some time in the future. More than 11 months have elapsed, so it is time to revisit the company. An updated analysis follows below.
Company Overview:
North Carolina-based BioCryst Pharmaceuticals is focused on the development of therapies for rare diseases where enzymes factor prominently in their pathology. The company has two approved therapies and several other drug candidates. Its franchise drug is called Orladeyo and was approved in December of 2020 for the treatment of hereditary angioedema [HAE].
HAE is a severely debilitating rare genetic condition characterized by swelling in multiple locations such as the hand, feet, intestines, face, and airway from excess fluid trapped inside the body's tissues. This rare affliction affects approximately one in every 50,000 individuals. The stock currently trades right around eight bucks a share and sports an approximate market capitalization of $1.5 billion.
November Company Presentation
The company's primary asset currently and in the future will be Orladeyo, also known as berotralstat. This is an oral, once-daily plasma kallikrein inhibitor for the prevention of HAE attacks in patients 12 years and older. Orladeyo is currently available in 15 countries and overseas sales make up just over 10% of overall revenue. Other HAE treatments require subcutaneous self-administration or intravenous injection. This makes BioCryst's only oral entry superior as far as delivery and a key reason it continues to take market share in the HAE space.
First Quarter Results:
On May 3rd, BioCryst posted its first quarter numbers . The company had a GAAP loss of 28 cents a share, three pennies above expectations. Revenue came in a bit lighter than the consensus at nearly $68.8 million, but that still represented year-over-year growth of just under 38%.
May Company Presentation
Management provided FY2023 guidance stating Orladeyo revenue is expected to be no less than $320 million this fiscal year. It also sees full year operating expenses of $375 million. This would be roughly flat to 2022's full year's expenses. The company expects SG&A expenses to increase to improve sales traction for Orladeyo, both here and abroad.
To keep expenses flat, leadership has made several changes on the R&D front. In 2022, the company discontinued their BCX9930 and BCX9250 programs in 2022 and also delayed its BCX10013 clinical program. This leaves BioCryst's pipeline relatively sparse. They are focusing to expand the Orladeyo label within an ongoing pediatric trial 'APeX-P', and pursuing BCX10013, a potential best-in-class once-daily, oral Factor D inhibitor. There other efforts are largely at the discovery stage.
Analyst Commentary & Balance Sheet:
Analysts are mixed on the company's current prospects. Since first quarter results posted, five analyst firms including Needham and JMP Securities have reissued Buy/Outperform ratings on BioCryst. Price targets proffered range from $10 to $30 a share. Both RBC Capital ($9 price target) and Bank of America maintained their Hold ratings on the equity.
Approximately 20% of the outstanding float in the stock is currently held short. The CEO sold just over $1 million worth of shares in February but retains the vast majority of his stake in the firm. The Chief R&D Officer disposed of nearly $60,000 worth of stock in late April. Those are the only two insider transactions in the equity so far in 2023.
May Company Presentation
The company ended the first quarter of 2023 with just over $400 million in cash and marketable securities on the balance sheet after posting a net loss of $53.3 million for the quarter. Management noted in mid-April that BioCryst ' had entered into a $450 million loan agreement with Pharmakon which provided for an initial term loan of $300 million. The remaining $150 million can be drawn at the company's option until September 2024. The initial proceeds were used to repay the outstanding indebtedness with Athyrium and provided approximately $26 million for other general corporate purposes. '
May Company Presentation
Verdict:
The current analyst firm consensus has the company losing 95 cents a share in FY2023 as sales grow 20% to just over $325 million. They see revenue growth accelerating to the mid-20s in FY2024 and losses being cut to 54 cents a share.
May Company Presentation
To put in charitably, the market has not been kind to ' profitless ' growth stocks since the Federal Reserve began its round of the most aggressive monetary tightening since the early 80s in March of last year. Management continues to believe it has a path to $1 billion in peak sales for Orladeyo.
BioCryst has done a good job growing Orladeyo sales since the compound was approved late in 2020. If management can get its franchise drug to $1 billion in annual sales while containing expense growth to the rate of inflation, BioCryst will be a very profitable company.
The challenge is that scenario appears a few years away. Before I invest in the stock, I would like to see a few quarters of continuing slowing quarterly cash bleed as sales rise and expenses stay flat. Until then, I will remain on the sidelines in regard to BCRX stock.
"We see in order to move; we move in order to see ."? William Gibson
For further details see:
BioCryst Pharmaceuticals: An Updated View