• Fundamentals well positioned with $1B peak sales forecast for Orladeyo and $300M influx of cash from royalty deals
• Potential catalysts: update on Orladeyo sales with Q4 results on Feb. 23; BCX9930 trial enrollment underway and expect updates on progress
• Sentiment is improving with positive news flow and strong sales
• Technical analysis provided by Rexman who says $20s are possibly imminent on breakout 

In today’s volatile markets, finding a small cap biotech stock that isn’t highly speculative is challenging, and that’s what makes BioCryst (BCRX) so compelling. The Research Triangle, N.C.-based biotechnology company has strong sales growth and a promising pipeline. 

Our StoryTrading community has been following BCRX closely, and our contributor Zak Keller recently provided an update on the stock through the lens of our four pillars: Fundamentals, Catalysts, Sentiment, and Technicals.

 

Overview

BCRX is a biotech company that specializes in oral prophylactic treatments for rare diseases. The company already has a drug on the market called Orladeyo, which was FDA approved in 2020 to treat hereditary angioedema (HAE), a disease characterized by recurrent episodes (also called attacks) of severe swelling of the skin and mucous membranes.

The standard of care for HAE has typically been unpleasant and time-consuming, with a combination of injectables and IV infusions. While the initial 24-week data of Orladeyo showed only a 44 percent reduction in the rate of HAE attacks, newer data over the course of 25 to 96 weeks showed an 80 percent reduction in the average number of HAE attacks per month, an efficacy on par with the current standard of care. The drug is currently approved in the U.S., E.U., U.K., U.A.E., and Japan, and has patent protection through October 2039.

The total addressable market for Orladeyo is estimated at $4.5 billion in the U.S., $4.5 billion in the U.K., and $500 million in Japan, according to a Third Eye Holdings presentation.

While Orladeyo alone could make BCRX profitable in the future, most of the company’s long-term growth potential has to do with its Factor D inhibitor, BCX9930, which has eight treatment indications, including two for hematology, three for rheumatology, and three for nephrology. 

BCX9930 is currently in its phase III trials for paroxysmal nocturnal hemoglobinuria (PNH), a rare acquired, life-threatening disease of the blood. It is also in phase II trials for three different nephritis indications, which are related to the kidney's ability to filter waste from blood.

It should be noted there are several drugs already on the market or in phase II or III trials for treating PNH. Soliris and Ultomiris are manufactured by Alexion and approved for use in the U.S., E.U., and Japan. Alexion’s combined revenue in 2020 for the two drugs was $5 billion, while Alexion’s total revenue in 2020 was approximately $6.1 billion. Soliris and Ultomiris are administered intravenously and, again, BCX9930 is administered orally. 

Pegcetacoplan is another similar drug approved in the U.S. that is administered via injection and manufactured by Appellis. At the same time, Amgen, Akari, Roche and Novartis all have PNH-related drugs in the phase II or III trials. 

Fundamentals

In the first quarter of 2021, BCRX recorded $10.9 million in sales from Orladeyo. The company’s total first-quarter sales were $19 million. Sales of Orladeyo continued to rise in subsequent quarters, with second-quarter sales of $28.5 million and third-quarter sales of $41 million. The company is planning to do $45.6 million in Orladeyo sales in the fourth quarter of 2021. If sales of the drug continue at the same clip, they could reach $262 million for 2022. 

The reimbursement rate for Orladeyo is $485,000 annually per patient in the U.S. The reimbursement rate is lower in the E.U. and Japan. U.S. prescriber base grew by another 25 percent in the company’s most recent third quarter and now includes nearly half of the top 500 HAE treating physicians. U.S. sales for Orladeyo accounted for almost all sales of the drug in 2021, but that should change in 2022 as more countries prescribe.

The company’s operating expenses were $56 million in the first quarter, and $64.5 million and $79 million in the second and third quarters, respectively. BCRX ended the third quarter with approximately $204 million in cash. Based on expectations for revenue, operating expenses, and the company’s option to access an additional $75 million from an existing credit facility, BCRX said its cash runway should be able to take them into 2023.  

Another infusion of capital was announced in late November when the company issued a press release about Royalty Pharma and OMERS Capital providing $350 million in funding in exchange for royalties. The company said the funds will support trials for BCX9930 across multiple indications and the global launch of Orladeyo.

In January 2022, the company issued a press release saying it expects net revenue of Orladeyo to more than double in 2022 to “no less than $250 million.” BCRX also said it expects Orladeyo net revenues of $122 for 2021 and the drug to become the market leader in HAE prophylaxis therapy with peak sales of $1 billion, although no timetable was assigned for achieving this milestone. 

There has been recent insider buying, with CFO Anthony Doyle purchasing more than 35,000 shares at $12.48 a share, and Director Vincent Milano, buying 7,500 shares at $12.19 a share. 

Catalysts

The company said in a January 2022 press release that it is enrolling PNH patients in pivotal REDEEM-1 and REDEEM-2 trials of BCX9930, oral Factor D inhibitor for complement-mediated diseases. BCRX plans to further advance and expand its Factor D program over the next two years. Once BCRX starts getting midpoint data from the BCX9930 PNH trials, the company could become a buyout target. 

In the U.K., the National Institute for Care and Health Excellence (NICE) recommended Orladeyo for patients having two or more HAE attacks a month, which could open the drug up to a broader range of patients in the U.K. The other prophylactics are only covered for patients having two or more attacks a week, which is a much more limited group of patients.

Sentiment

Sentiment continues to improve quickly for BCRX due to a flurry of positive news since November 2021, as well as continued disclosures from management on strong sales performance in the future.

Technicals

StoryTrading consults with technical expert Rexman to identify resistance levels and bull targets. Following is his recent chart and analysis on BCRX.

“Needs to clear above the upper yellow line, in order to run to the 20s. The 14s are strong mid- term supports.” said Rexman, who you can find on Twitter.  

Summary

In today’s volatile markets, finding a biotech stock that isn’t purely speculative can be challenging, and yet BCRX may have what it takes. 

The company’s fundamentals are looking considerably better given the recent influx of cash from the royalty deals, as well as increasing sales of Orladeyo. BCRX should have no trouble funding trials for drugs in its pipeline in the near term, and Orladeyo revenue could exceed near-term operating expenses.

Looking at catalysts, BCRX is now enrolling patients in pivotal REDEEM-1 and REDEEM-2 trials for BCX9930. The next catalyst could arrive during the company’s fourth-quarter call, which is expected on February 23. The hope is that BCRX will provide color on how enrollment for the trials is going, in addition to rollouts for Orladeyo in new countries.

Sentiment continues to improve quickly due to a flurry of positive news since late 2021, as well as continued disclosures from management on strong sales performance in the future.  

Technically, Rexman recently tweeted that a share value in the $20s is possible. 

The big question is whether BCRX can deliver on sales for Orladeyo and trials for BCX9930 in 2022. That's for you and the rest of the market to determine. We'll be here to tell the story as events unfold!