BioCryst Pharmaceuticals,Inc. (BCRX)

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BioCryst's BCX9930: Alexion's Biggest Headache Now
Oct. 5, 2020 12:33 PM ET|8 comments | About: BioCryst Pharmaceuticals, Inc. (BCRX), Includes: ALXN, APLS
Francisco Javier Garcia

Value, Momentum, Contrarian

Summary
On September 30, BioCryst reported the results of BCX9930's Proof of Concept as an oral treatment for PNH as Monotherapy.

The results have been very promising confirming the good expectations that existed.

We can say without any doubt that BCX9930 has a good chance of becoming the first oral drug to treat PNH as monotherapy in the future.

My strategy is to keep buying small amounts of stocks for the duration of the current downtrend.

On September 30, BioCryst (NASDAQ:BCRX) reported the results of BCX9930's Proof of Concept as an oral treatment for PNH as Monotherapy.

The results have been very promising confirming the good expectations that existed.

Total of seven patients were in the trial, and data from four treatment naïve patients showed clinical benefit who received more than six weeks of BCX9930 monotherapy dose of 400 mg.

In the trial, the main objective was achieved, that is, to raise hemoglobin levels in the blood to healthy levels, so Hemoglobin levels increased by a mean of 3.8 g/dL from baseline and maintained without transfusions. Three of four patients have responded with hemoglobin levels over 11 g/dL to date. Hemoglobin in the fourth patient with compromised bone marrow function from aplastic anemia PNH responded with an increase from 6 g/dL at baseline to 9.5 g/dL on treatment.

All four patients showed reduction in LDH (Lactate dehydrogenase), commonly used as a biomarker of cell damage or death.

On the safety front, most common adverse event was mild to moderate headache lasting one to three days. One patient had a mild rash that resolved after continued BCX9930 dosing at 100 mg bid. One patient developed a mild rash at 200 mg bid that is resolving during uninterrupted dosing after dose escalation to 400 mg bid.

Although this Proof of Concept still represents an initial first step, with a small number of patients and a limited time, we can say without any doubt that BCX9930 has a good chance of becoming the first oral drug to treat PNH as monotherapy in the future.

In addition, the FDA is confident in the success of BCX9930, as on 08/31/2020, it reported the approved orphan drug designation for BCX9930 for the treatment of paroxysmal nocturnal hemoglobinuria. The FDA has also granted fast track designation for BCX9930 in PNH.

Currently, there are only two drugs on the market (Soliris and Ukltomiris) marketed by Alexion Pharmaceuticals (NASDAQ:ALXN) administered by intravenous injection to treat PNH. These drugs have been around for several years and are currently lagging behind, with limited efficacy and many side effects.

In 2019, Alexion, aware that could lose his monopoly on PNH treatment (with a market of around $3 billion in the US alone), bought the pharmaceutical company Achillion Pharmaceuticals for $930 million. This purchase secured two promising oral drugs that Achillion was developing to treat PNH (ACH4471 and ACH5228). Here, it is interesting to note that the phase II results of ACH4471 (Danicopan) given in combination with Soliris to treat PNH were worse than those reported by BioCryst's BCX9930:

ACH4471:

1) Increases in mean hemoglobin of approximately 2 g/dL at week 4 (n=11); for the 4 patients that have reached 24 weeks their mean rise in hemoglobin is 2.6 g/dL

2) A reduction in blood transfusions from 34 transfusions totaling 58 units in the 24 weeks prior to screening to only 1 transfusion of 2 units during treatment with ACH-4471

3) Increase in the percentage of PNH RBC Type III clone size from 40% at baseline to 71% at week 12 (n=8)

BCX9930:

1) Hemoglobin levels increased by a mean of 3.8 g/dL from baseline

2) No blood transfusion was needed during the trial

3) In all four patients, the size of the PNH red blood cell clone approached that of the PNH granulocyte clone, indicating near-complete control of complement-mediated hemolysis. The mean relative (red blood cells/granulocytes) PNH red blood cell clone size increased from 48 percent at baseline to 94 percent on treatment

Alexion is currently carrying out trials with both drugs to achieve an oral drug effective enough to replace Soliris and Ultomiris. Thus, ACH4471 is currently being tested in a phase III trial as an oral treatment in combination with Soliris to treat PNH, and with ACH5228, a Proof of Concept trial for PNH has not yet begun.

Another pharmaceutical company researching a drug to treat PNH is Apellis Pharmaceuticals (APLS). On 09/15/2020, the Company submitted a marketing application request to the FDA and the EMA for their subcutaneous injectable drug Pegcetacoplan to treat PNH as monotherapy. The results obtained from phase III were very promising. BCX9930's results have been similar to those reported by Pegcetacoplan.

Therefore, BCX9930, currently, represents the only oral drug that is being tested to treat PNH as monotherapy and with excellent results in both efficacy and safety.

At Alexion, they will surely be watching with some concern the positive results that BCX9930 has achieved in the Proof of Concept trial to treat PNH. A juicy multi-trillion dollar market is at stake, and Alexion won't want to lose the monopoly that has so far gained thanks to Soliris and Ultomiris.

From BioCryst, it is stated that at the end of this year, the results of a trial to test BCX9930 in inadequate responder PNH patients will be reported. Most likely the results will be very good confirming the superiority of BCX9930 over Soliris.

In summary, BCX9930 has taken a first step towards becoming the first oral drug to treat PNH as monotherapy, a situation that will give Alexion some headache.

Following the decline in BCRX's share price of the last 3 months, which has currently brought it to around $3.40, the upside potential that BCRX currently presents is enormous.

We can assure that the Company, with a market capitalization of only $623 million, is currently clearly undervalued.

I have to say that BioCryst is a biopharma with a very volatile price action, and that we have to be very patient.

In my last article: "BioCryst Pharmaceuticals: Enter Now Before The End Of Next September 2020" I recommended entering before the end of September. I still think that now is a very good time to enter, and that we are very close to strong revaluations in the share price. In the short term, it is likely that the stock will continue to decline as long as we do not have any further news on Galidesivir. We have been in a decreasing trend for 3 months that will surely end up breaking. I have been taking advantage of the last few days to make small purchases between $3.45 and $3.75. And I'll keep buying more as long as the current decline continues. If all goes well in the last quarter of 2020, with the approval of Berotralstat in the US and Japan, and good results from Galidesivir and BCX9930, I expect to see the share price above $10 by the end of the year.

Main conclusions:
1) Currently, Alexion's Soliris is the only drug approved to treat PNH in the world. It is an intravenous injectable drug, with little efficacy and many side effects.

2) On 09/15/20, Apellis submitted a marketing application to the FDA and EMA for Pegcetacoplan in the US and Europe. Most likely, it will be approved for the second half of 2021, so it will become the best drug to treat PNH by improving Soliris. It is a drug for subcutaneous administration for the PNH treatment as monotherapy.

3) Alexion will likely submit a marketing application for ACH4471 in 2021, making it, if approved, the first oral drug to treat PNH as combination therapy in 2022.

4) If the upcoming trials with BioCryst's BCX9930 confirm the positive results of the proof of concept, BCX9930 will become, if approved, the first oral drug as monotherapy to treat PNH with high efficacy and very few side effects within 2-3 years. Thus, BCX9930 will manage to agglutinate a large part of the PNH market valued at several trillions of dollars.

Update on Galidesivir
Regarding the antiviral Galidesivir, we have had two positive news lately:

1 - The NIAID has awarded BioCryst an extra fund of $44M to continue funding the Galidesivir trials.

2 - The University of Florida published a report a few days ago stating that Galidesivir, together with Remdesivir, were the two antiviral drugs that seemed to have the most powerful action in invitro tests against Covid-19. In fact, BCRX is expected to report data on Galidesivir in vitro and animal models soon.

But on the negative side, we have the delay until this last quarter in updating the phase 1 data, which should have arrived at the end of last quarter. Perhaps this delay and the lack of constant updating have been responsible for the current downward trend in the stock.

This lack of information by the company may be penalizing the stock price. In fact, there is a lot of hype in the data on the in vitro tests that are being carried out. This data is expected to be reported very soon and could be an important milestone that could reverse the current downward trend in the share price.

I am optimistic about the results that Galidesivir will finally report, both the in vitro and animal models, and the results of part 1 of the trial in Covid patients. The fact that the Government has provided more funds to continue the trial and the positive report from the University of Florida make me increase my confidence. Of the three drugs that are currently been testing (Berotralstat, BCX9930 and Galidesivir), any positive data from Galidesivir is the one that will be able to move the share price upwards with the greatest force in the coming days or weeks.

I believe that at the end of this long wait, we will see the reward.

Cash status
BCRX ended Q2 with $192 million in cash. With a current cash burn of around $40 million per quarter, it gives the Company cash runway through Q2 of next year.

An offering will probably be made by the first half of 2021.

Possible risks
As in all biopharma, there are some risks that must be taken into account:

- Galidesivir part 1 update won't show sufficient efficacy against Covid to continue the trials of part 2.

- The FDA and/or the Japanese Health Authorities finally do not approve Berotralstat.

Conclusion
The recent Proof-of-Concept data for BCX9930, while still in a very early stage, make us very optimistic about the possibility that it will become the first oral drug to treat PNH as monotherapy in the future.

Despite the multiple drugs currently competing for a share of the PNH market, BCX9930 appears to have the best profile in terms of efficacy, safety, and mode of administration. Although it must be said that since it is still in a very early stage, we will still have to wait 2 or 3 years to see the drug approved.

Alexion Pharmaceuticals must be looking with concern at the results that BCX9930 will achieve in the future.

Despite the current downward trend in the share price, thanks to the multitude of upcoming catalysts (Galidesivir, Berotralstat, BCX9930), I think we will see a strong recovery in the fourth quarter.

My strategy is to keep buying small amounts of stocks for the duration of the current downtrend.

The wait will bring the reward.

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.
https://seekingalpha.com/article/4377644-biocrysts-bcx9930-alexions-biggest-headache-now