“Following the completion of the preclinical safety studies of both BCX5191 for hepatitis C and BCX4161 for hereditary angioedema, we are now taking the final steps to move these promising programs into the clinic before the end of this year,” said Jon P. Stonehouse, President & Chief Executive Officer of BioCryst. “Furthermore, we are extremely pleased with the favorable ulodesine gout safety and efficacy profile, confirmed by over 115 patient-years of drug exposure in our recently announced 52-week results. This robust data substantially reduces the risk associated with ulodesine’s Phase 3 development and will enhance its appeal to potential development partners.”
Second Quarter Financial Results
For the three months ended June 30, 2012, revenues increased to $4.2 million from $3.7 million in last year’s quarter as a result of an increase in collaboration revenue from the Biomedical Advanced Research and Development Authority/Department of Health and Human Services (BARDA/HHS) under the contract for the continued development of peramivir.
Research and development (R&D) expenses for the second quarter decreased to $12.8 million from $14.4 million in the second quarter of 2011. In the recent quarter, lower development costs associated with the ulodesine (BCX4208) program were partially offset by higher development costs associated with the BCX5191 and BCX4161 preclinical programs.
General and administrative (G&A) expenses for the second quarter decreased to $1.6 million compared to $3.5 million in the second quarter of 2011, primarily due to reductions in administrative expenses during 2012.
Interest expense related to the non-recourse notes was $1.2 million in the second quarter of 2012, in-line with last year’s quarter. In addition, a $1.0 million mark-to-market loss on the foreign currency hedge was recognized in the second quarter of 2012, similar to the loss of $1.0 million in the second quarter of 2011. The hedge losses resulted from changes in the U.S. dollar/Japanese yen exchange rate related to the foreign currency hedge agreement entered into in conjunction with the RAPIACTA® royalty monetization transaction.
The net loss for the second quarter 2012 was $12.3 million, or $0.25 per share, compared to a net loss of $16.3 million, or $0.36 per share, for the second quarter 2011.
Cash and investments totaled $53.5 million at June 30, 2012, and $57.7 million at December 31, 2011. Net operating cash use for the second quarter of 2012 was $8.1 million, and excludes $3.7 million in proceeds from sales of common stock through the Company’s at-the-market offering (ATM) during the quarter, $1.6 million in royalties received during the quarter from RAPIACTA® sales designated for interest on the non-recourse notes, as well as collateral payments under the foreign currency hedge agreement. Net operating cash use for the first six months of 2012 was $20.1 million.
Year to Date Financial Results
For the six months ended June 30, 2012, total revenues increased to $16.4 million from $9.2 million in the first half of 2011. The increase was primarily due to the recognition of $7.8 million of previously deferred forodesine-related revenue during the first quarter 2012, resulting from the restructuring of the license agreement between BioCryst and Mundipharma.
R&D expenses increased modestly to $28.3 million for the first half of 2012 from $27.9 million in the same period of 2011. Expenses for 2012 included the recognition of $1.9 million of previously deferred expenses associated with forodesine and the Mundipharma agreement. Excluding these non-cash forodesine expenses, lower 2012 development costs related to ulodesine substantially offset higher 2012 costs associated with the BCX5191, BCX4161 and peramivir development programs, as compared to levels in the first half of 2011.
G&A expenses decreased significantly to $3.3 million for the six months ended June 30, 2012 from $7.0 million for the six months ended June 30, 2011, due to the 2011 relocation of BioCryst’s corporate headquarters and to lower third party professional expenses during 2012 associated with the realization of cost containment measures.
The net loss for the six months ended June 30, 2012 decreased to $18.3 million, or $0.38 per share, compared to a net loss of $29.3 million, or $0.65 per share for the same period last year.
Clinical Development Update & Outlook
• In July, the Company completed IND-enabling nonclinical safety studies of BCX5191 for hepatitis C and BCX4161 for hereditary angioedema. The Company is completing Phase 1 planning for both programs, which remain on track for the initiation of first-in-human trials before the end of the 2012. The main success factors for the BCX5191 Phase 1 trial will be to confirm that low doses can be administered safely and deliver activity against the hepatitis C virus. The main success factors for the BCX4161 Phase 1 trial will be to demonstrate safety, adequate drug exposure via oral administration and pharmacodynamic effect on kallikrein inhibition.
• Also in July, BioCryst reported favorable 52-week results from the extension phase of its randomized Phase 2b trial of ulodesine added to allopurinol in patients with gout who had failed to reach the serum uric acid (sUA) therapeutic goal of <6 mg/dL on allopurinol alone, as well as positive Phase 2 safety results in patients with mild- to moderate-renal impairment. The results of the safety extension confirm that ulodesine was generally safe and well-tolerated. In addition, the Company has also initiated the Scientific Advice Process with the European Medicines Agency and expects feedback in the third quarter of 2012.
• BioCryst continues to enroll patients in the ongoing Phase 3 efficacy clinical trial of the influenza antiviral i.v. peramivir. The Company plans to provide an update following the planned interim analysis, which is expected after the conclusion of the 2012 Southern Hemisphere flu season.
Financial Outlook for 2012
Based upon current trends and assumptions, as well as the Company’s planned operations, BioCryst expects net operating cash use to be in the range of $37 to $43 million, reflecting an increase of $5 million from previous projections, and its total operating expenses to be in the range of $57 to $69 million, unchanged from previous projections. The $5 million increase in the Company’s operating cash forecast is due primarily to an anticipated increase in R&D investment for the development of the hepatitis C program, as well as a lower net margin contribution related to peramivir development under the BARDA/HHS advanced development contract. BioCryst’s 2012 financial results will be heavily dependent on peramivir-related operating expenses, which are largely a function of the rate of enrollment in the Company’s ongoing Phase 3 clinical trial, which in turn is dependent on the prevalence and severity of influenza in those geographies where BioCryst has clinical sites.