On August 6, BioCryst Pharmaceuticals (NASDAQ:BCRX) reported Q2 results. We were all hoping to find some data from part 1 of the Galidesivir trial that is being conducted in Brazil to evaluate efficacy and safety as a treatment against COVID-19. However, the Company has only briefly commented that everything is going according to plan and that, until the end of the third quarter (next September), they will not give any information about part 1 of the trial.

The only remarkable thing about Galidesivir has been a few brief mentions made during the call, where it is said that Galidesivir has more lasting effects than Remdesivir, and that the Company has the firm intention of continuing with the trial and starting part 2 as soon as they have data enough to justify the efficacy of the drug. They also commented that they will have enough supplies of Galidesivir to start the part 2.

It has really been frustrating as we have been waiting since the Galidesivir trial started last April, without any data giving us any indication of the drug’s effectiveness against COVID-19. And the market wants to know if Galidesivir really works. In fact, as a result of the absence of data on the ER, the share price fell by around 5% in Thursday’s session.

In any case, it must be recognized that the Company reported a few weeks ago that data from part 1 of the trial would be provided “during the summer”, so that the end of the third quarter would fall within this time interval.

Despite this slight disappointment, I am convinced that BioCryst offers a great entry opportunity at current prices, before the end of September approaches.

As reported by the Company, data on two very important milestones will be provided at the end of the next third quarter:

1 – Update on Galidesivir trial part 1 as treatment against COVID-19

2 – Update on BCX9930 as treatment for PNH in naive patients

– 200 mg/400mg BCX9930 data from treatment-naïve PNH patients expected in Q3 2020, 200 mg/400mg data from poor responders to C5 inhibitors expected by year end 2020

– Information from Part 1 of galidesivir trial in COVID-19 patients expected by end of Q3 2020

Source: BioCryst ER

The importance of the data from both trials is justified by the huge potential revenues that both drugs can generate in the future.

On the one hand, Galidesivir as a possible antiviral treatment against COVID-19 with several billion dollars of annual revenue and which I am personally convinced will replace Remdesivir as standard of care treatment against COVID-19, and on the other hand, BCX9930 as a treatment for diseases within the Factor D space, with the same amount of billions of dollars.

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And if this were not enough, by the end of this year 2020, the approval of Berotralstat in the US and Japan is expected, and in Europe, in the beginning of 2021. Berotralstat is expected to generate revenue of more than $500 million per year.

With a current market capitalization of around $700 million, it is highly likely that, with good data from both trials, we will see significant increases in the share price in a month or two.

I expect to see the BCRX market cap above $2 billion soon.

Here is a brief summary of the status of the 3 most notable drugs that BCRX currently has in its pipeline:

Galidesivir

As I mentioned earlier, Galidesivir is immersed in part 1 of the trial that is being carried out in Brazil to test the efficacy and safety of the drug as an antiviral treatment against COVID-19. Safety was already demonstrated in a phase 1 trial last year in which the drug was tested in healthy people without noticeable adverse effects.

Galidesivir is included within the so-called antivirals because it prevents the replication of the virus in the patient’s cells, and its efficacy has been demonstrated in in-vitro test with many different types of virus (filovirus, Zika, yellow fever, coronavirus, etc.)

This nucleoside RNA polymerase inhibitor disrupts the viral replication process and has the potential to combat multiple viral threats.

Its similar mechanism of action to Remdesivir portends good results in part 1 of the trial. And its excellent safety profile makes it very likely to outperform Remdesivir in this regard.

Due to the low bar that Remdesivir has featured, with an efficacy rate of 34% compared to placebo, and some adverse side effects, it is very likely that Galidesivir will outperform Remdesivir, and therefore, it will become the standard of care as treatment for COVID-19.

There is a concern among shareholders that part 1 of the trial is taking a long time to complete. It is true that, since last April, there has been enough time to complete part 1 (with 24 patients). But it is also true that this type of trial, with infected patients, is difficult to develop. And after Gilead’s (NASDAQ:GILD) bad experience with multiple trials issues with Remdesivir, I personally prefer it to take longer to finish the trial with solid results.

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On the other hand, it seems that COVID-19 is going to be with us for a long time (several years), so waiting a few more months, I don’t think it will be important. Also, there are no other antiviral treatments, apart from Galidesivir, that appear to be approved soon. The only one that currently exists, Remdesivir, has no competition, for now.

The results of part 1 expected next month will give us a good clue of how Galidesivir works, and what will be the optimal dose to continue with part 2. Practically, after these results, we will already know if Galidesivir works, so a significant revaluation in stock price is expected if good results are presented.

I also expect that, after the part 1 results, and if they are promising, NIAID will contribute an additional amount of funds to continue to fund the costs of the trial. This agency already provided funds last April for the start of the trial.

If all goes well, and I hope so, by the end of the year, we will have Galidesivir approved as an antiviral treatment against COVID-19. Imagine the revenue impact this will have on a small pharmaceutical company like BioCryst.

BCX9930

As for BCX9930, it is currently being tested as a treatment for PNH. Recently, the FDA has granted Fast Track designation for BCX9930 as treatment for PNH, which infers the FDA’s interest in the drug. Results, from phase 1 trial, have already been provided in patients with the lowest dose (50 mg and 100 mg) with encouraging results: Low dose cohort (50 mg and 100 mg twice-daily) data in three treatment-naïve paroxysmal nocturnal hemoglobinuria (PNH) patients who completed 28 days of therapy shows BCX9930 inhibited complement and was safe and generally well-tolerated.

All patients had dose-dependent reductions in LDH and increases in hemoglobin.

It is now being tested in patients with native PNH at higher doses (200 mg and 400 mg), which is expected to be the optimal therapeutic doses. The results of this trial are expected by the end of next September and will be very important since they will confirm if BCX9930 really works to treat PNH and, above all, if BCX9930 could be used to treat other diseases within the Factor D space with potential revenue of several billion dollars annually. With the promising results reported for 50mg and 100mg doses, I am optimistic here.

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Source: BioCryst

Berotralstat

The oral drug to treat HAE (hereditary angioedema) is expected to be approved in both Japan and the US during the last quarter of the year, and in Europe early next year 2021.

The efficacy and safety have already been demonstrated in the different trials carried out. Although less effective than its competitor Takeda’s (NYSE:TAK) Takhzyro, the fact that it is administered orally, compared to Takhzyro injection, is expected to be widely accepted by the HAE community.

Berotralstat is expected to generate annual revenue of $500 million, so BCRX here has a solid foundation to justify an MC valuation of above $1.5 billion. I deduce the latter with a very cautious P/S ratio of 3: $500 million X3 =$1.5 billion.

Cash Status

As reported by the company, as of 30/06/20, they have $191.6 million in cash. They are expected to burn between $150 million and $165 million for all of 2020. This means a burn ratio of around $40 million per quarter, so we deduce that BCRX will have enough cash to fund operations until the second quarter of next year, 2021.

Possible risks

As main risks that can make the share price fall, we can list:

– The results of Galidesivir will not be as expected.

– BCX9930 results will not confirm early results for treating PNH.

Conclusion

I think that, at current price levels (around $4), BCRX offers a very good entry opportunity, given the two main milestones looming next September. In addition, although the results of these two milestones won’t be as expected, only with Berotralstat, a valuation above $1.5 billion would already be justified for the potential revenue it presents for the next few years ($500 million).

At the end of next September, we will know if Galidesivir works as an anti-COVID-19 treatment. All the indications prove it.

BCX9930 also has its big date next month, and we will know if it will be a major player in factor D diseases.

Due to the upside potential it presents and the low risk of big price drops, I think now is the time for new investors to invest and average those that already are invested.

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 (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.



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