BioCryst Short-Sellers Lose Control Feb. 21, 2021 8:40 PMBioCryst Pharmaceuticals, Inc. (BCRX)ALXN, GILD, TAK Summary
Orladeyo now has regulatory approval for sale in the USA and Japan. The Oral Factor D Phase 1 data is due to be published in the 1st quarter. BioCryst announced $325 Million of funding from Royalty Pharma and Athyrium Capital Management. Baker Brothers and Sarrisa Capital now own 16% of BCRX. The current short position is 31 million shares. The Company BioCryst (NASDAQ:BCRX) develops novel, oral and small molecules that inhibit enzymes playing a key role in biological pathways of rare diseases. Biocryst has built a world-class sales team to launch Orladeyo in the US and EU. Biocryst has signed a licensing agreement with Torii to launch the product in Japan. Management at Biocryst hired dozens of professionals with 10 plus years of rare disease sales experience, many of these salesmen came from Hereditary Angioedema (HAE) competitors. The vice-president and US general manager Allen Hodge was even responsible for the successful efforts of HAE drug launches of Cinryze and Firazyr, two pioneering injectable treatments for HAE. You could not get a more promising leader for this task. Last December the 7th, 2020 BCRX announced a royalty agreement with Royalty Pharma and Athyrium Capital Management. This agreement gives BCRX $325,000,000 to launch Orladeyo in the USA and the EU.
Berotralstat Approval With the US and Japanese approval of Berotralstat for the treatment of Hereditary Angioedema (HAE), BioCryst is in a position to finally cash in on 20-plus years of R&D. Berotralstat (commercially called Orladeyo) is an oral, once-daily, small molecule kallikrein inhibitor positioned to capture a significant share of a $1.5 billion market. This market is expected to grow to $3.8 billion by 2025. This market is currently dominated by Takeda (NYSE:TAK) and CSL Behring LLC which offer preventive and rescue therapies.
These therapies require intravenous (IV) or subcutaneous administration which is highly invasive and time-consuming. The HAE market is clambering for an oral solution and Orladeyo is here to fill that void. The current solutions cost approximately $600k per year, and BioCryst is charging 485k per year for its daily oral pill. Orladeyo is a once-a-day pill given to patients with a terrible lifelong disease called Hereditary Angioedema. The available treatments for this disease are all IV drugs that are painful and produce local reactions.
Orladeyo is the first oral drug approved to treat this disease. On December 3rd, the US granted approval- very importantly with zero label statements- meaning that they had no concerns about side effects or dangers. On January 22nd, Japan granted approval. EU approval is expected imminently in the 2nd quarter of2021. In the US there are at least 10,000 people with HAE, yet only 7,500 are currently being treated.
There has been a peer-reviewed survey finding that 98% of IV prophylactic patients (the 7,500) would prefer an oral treatment and 96% of the non-prophylactic patients (the 2,500) would want an oral treatment. As it is shown on page 13th of the January 2021 Corporate Presentation (page 13), in their recently undergone survey, 59% of the patients expressed high willingness to use Orladeyo, with the number rising to 71% with Physician recommendation.
Japan had no approved treatment until Orladeyo was approved on January 22nd. The UK has awarded Orladeyo early access to the drug on November 9th. For further information on Orladeyo one should review this excellent piece written by Bio9999.
The Pipeline Peramivir ™ (Rapivab) Peramivir (Rapivab) is an antiviral drug for the treatment of influenza. Peramivir is a neuraminidase inhibitor, acting as a transition-state analogue inhibitor of influenza neuraminidase and thereby preventing new viruses from emerging from infected cells. It is approved for intravenous administration. Peramivir is a Bio-Defense drug that has been stockpiled by the government.
Galidesivir This nucleotide RNA polymerase inhibitor disrupts the viral replication process and has the potential to treat multiple viral threats. NIAID is currently testing Galidesivir for treating Covid-19 and Yellow Fever. Galidesivir was safe and generally well-tolerated in a Phase 1 clinical human trial. Galidesivir demonstrated survival benefits in animal studies against a variety of serious pathogens, including: Ebola, Marburg, Yellow Fever and Zika viruses.
Galidesivir demonstrated broad spectrum activity in vitro against more than 20 ribonucleic acid (RNA) viruses of nine different families, including coronaviruses, filoviruses, toga viruses, bunya viruses, arenaviruses, and flaviviruses. Galidesivir is the first antiviral that has ever shown such potential. Furthermore it is now known from the Phase I trial and the Brazil part 1 trial to clearly be safe, showing dose-sensitive effects in people. BioCryst was awarded a 44 million dollar contract by BARDA to further study the feasibility of commercializing the drug.
FOP - BCX9250 FOP is an ultra-rare, severely disabling condition characterized by the irregular formation of bone outside the normal skeleton, also known as heterotopic ossification (HO). HO can occur in muscles, tendons and soft tissue. Patients with FOP become bound by this irregular ossification over time, with restricted movement and fused joints, resulting in deformities and premature mortality. There are currently no approved treatments for FOP.
There are an estimated 3,500 to 9,000 patients worldwide, with 900 diagnosed so far. Currently there aren’t any approved treatments for this debilitating disease.
Oral Factor D Oral Factor D could be the most valuable asset in BioCryst. According to author PitBullTrades in the report “BCRX the Embarrassment of Riches” BCX9930 is novel, oral, potent and a selective small molecule inhibitor of Factor D currently in Phase 1 clinical development for the treatment of complement-mediated diseases.
The 3rd of August 2020, the U.S. Food and Drug Administration (FDA) granted Fast Track designation for oral Factor D inhibitor, BCX9930.
Staff excitement Staff and team from Biocryst Pharmaceuticals seem positive and excited about the incoming future of BCX9930. Such excitement has been conveyed in the recent conference calls where even typically humble staff such as the CEO Jon P. Stonehouse, or Vice President, William P. Sheridan would utter phrases such as: “Embarrassment of riches” or “We agree with Alexion that creating a potent specific and great oral Factor D inhibitor is a great challenge, and we are happy we have one”. “My only concern is I have no concerns, and that Oral Factor D is a pipeline in a molecule”.
Efficacy level The key for efficacy with this kind of treatment is improving the number of Hb Hemoglobin levels. BCX9930 showed 3.8g/dL improvement (page 31). The competitor Novartis showed 2.87g/dL improvement and Alexion 2.4-2.6g/dL.
“In the study, BCX9930 was highly specific for the alternative pathway and, after oral dosing of BCX9930 in primates, alternative pathway activity was completely suppressed.”
“These data demonstrate that BCX9930 is a highly potent and specific orally bioavailable Factor D inhibitor with potential for treatment of patients with PNH and other alternative pathway mediated diseases,” said Dr. William Sheridan.
Alternative Pathway What makes BCX9930 a game changer is the wide spectrum of Alternative Pathway Dysregulation disease it can treat. With potential to treat up to 8 diseases currently, one understands why insiders call Oral Factor D a pipeline in a molecule. Here are the known diseases Oral factor D treats:
PNH (Paroxysmal nocturnal hemoglobinuria)
aHUS (Atypical hemolytic uremic syndrome)
ANCA vasculitis (antineutrophil cytoplasmic antibody-associated vasculitis)
Lupus Nephritis
IgAN vasculitis
C3G (Glomerulonephritis)
PMN (Primary membranous nephropathy)
IgAN (IgA nephropathy)
The potential market size BCX9930 will be aiming for by 2025 scores up to $44.53B annually. That number is obtained by summing up the following:
"PNH Treatment Market Size Worth $5.8 Billion by 2025"
“"The global systemic lupus erythematosus market size is expected to reach USD 3.08 billion by 2025"
“"aHUS, having in mind the disease prevalence (2 and 5.5)/MM, and the disease being treated with Soliris - 500,000$/ year. The worldwide market size should range between ( $7.5B and $20.5B)" We take 7.5B as conservative.
“"Vasculitis treatment market size forecast to reach $743.2M by 2025"
“"IgAN, having in mind the 1/3,707 incidence rate, and the yearly cost of the drug $12,456 we are aiming for a market size of $4,660,088,544"
“Having in mind C3G can be treated with Soliris and it costs $500,000 a year. Summing up all those 45,700 patients the market size we aim for is 22.85B". Lacking hype or a press release, the company started phase 2 BCX9930 study for PNH. The official page of clinical trials shows that the start of phase II study was December the 18th, 2020. This is extremely bullish since it validates our thoughts that Phase 1 data readout will be good and warrant further studies.
The Valuation BCRX has 173 million shares outstanding and has a current price of $11.50 a share. This means BioCryst has a current market value of $1.9 billion. It is extremely hard to value an evolving drug pipeline, but I will try to give a conservative estimate.
Galidesivir Galidesivir is an antiviral that is currently being funded and studied by BARDA. The purpose of this effort is for BARDA to find a broad-spectrum anti-viral to stockpile against possible bio attacks. The Government has awarded a total of $147 million to study this drug. Look at how many billions in market cap Gilead Sciences (NASDAQ:GILD) gained with the Remdesivir approvals. Last quarter sales of Remdesivir were reported at $775 million. Roche Holding AG (OTCQX:RHHBY) just paid $350 million for US rights to AT-527, a potential Covid-19 antiviral from Atea Pharmaceuticals. Galidesivir could easily be worth $2-6 billion with the right approval.
Orladeyo Orladeyo has US and Japanese approval, and was designated UK early access. Being the only oral treatment for PNH, Orladeyo could easily gain 30-70 percent market share of a current $1.5 billion market. This market is anticipated to grow to $3.8 billion by 2025. Orladeyo could have sales of $300 million to $1 billion by 2023 and potentially $2 to $4 billion by 2025. Based on these sales BCRX easily garner a multiple of 7-10 times sales. This would be $3 billion on the low side to $20 billion on the high side.
BCX9930 Oral Factor D BCX9930 is potentially the most valuable asset in BioCryst's pipeline. BCX9930 has Orphan Drug and fast-track approval for PNH.
Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) and Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN) have announced they have entered into a definitive agreement for Alexion to acquire Achillion, a clinical-stage biopharmaceutical company focused on the development of oral small molecule Factor D inhibitors to treat people with complement alternative pathway-mediated rare diseases, such as paroxysmal nocturnal hemoglobinuria (PNH) and C3 glomerulopathy (C3G). ALXN acquired ACHN for $930 million.
It can be credibly argued BioCryst's phase 1 data is better than the data from Alexion's phase 2 studies.
Developing a successful Oral D Factor drug will create revenue in eight or nine very valuable markets. For additional insights please see BioCryst's presentation on BCX9930.
If ACHN in early Oral Factor D drug development was acquired for $930 million, BioCryst's better results must be worth at least $3 billion right now and potentially worth $40 billion or more in 2025.
This pipeline is easily worth $10 billion and with further development could be worth north of $50 billion. BCRX has a current market cap of $1.9 billion.
Conclusion The BCRX story has caught fire in social media, and could potentially see a rapid rise in share price if the short sellers are forced to cover. It is one thing to short 20% of the float in a biotech stock hemorrhaging money, but it is kamikaze insane to be caught in this position with BCRX. BioCryst is within a quarter of potentially producing hundreds of millions in yearly revenues. Institutions have quietly acquired over 90 percent of all the shares outstanding in BCRX, leaving an actual float, outside of institutional holdings, of 17 million shares at the most.
Say the institutions believe the stock is worth 50 or 60 dollars a share, at what price do the shorts find 30 million shares to cover this position? With one blockbuster drug approved and enough money to start multiple fast-tracked trials on a second- BCRX looks increasingly poised to be a buyout candidate. If Oral Factor D proves to be the holy grail the company believes it is, you could easily be looking at a 100 dollar stock in the future.
Disclosure: I am/we are long BCRX. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
Submitted February 21, 2021 at 10:51PM by MarkZhNC https://ift.tt/3uiAfhL
