BioCryst labours and brings forth a mouse

Shareholders expecting flashes of inspiration at BioCryst’s strategic update, one week after three development setbacks were crowned by its failure to complete a takeover of Presidio Pharmaceuticals, have been left disappointed. BioCryst narrowed its focus to three preclinical assets – two of which are already mired in delays – and cut costs to spin out its remaining cash reserves until mid-2014.

Unimpressed investors sent the troubled company’s stock down another 7% on Friday, and its anaemic $70m market capitalisation is just $26m above reported cash. Remarkably, the axe that BioCryst now plans to swing over half its workforce will avoid its bloated C-suite, which in previous years has accounted for a total salary bill of some $4m.

The $44m of BioCryst’s third-quarter cash was roughly equivalent to its annual burn, but after implementing the restructuring the company expects to spend just $22-25m next year. Thus the $36m or so of expected 2012 year-end cash should last 15 to 18 months, it said.

In tatters

Yet after the Presidio shambles left its hepatitis C-focused strategy in tatters the company looks desperately short of ideas. With precious little to get excited about in the pipeline after the phase III failure of a government-funded flu programme, handing back to investors what remains of its cash balance was an obvious possibility; but maybe that just would not have been the biotech way.

It is perhaps a small mercy that the $2-4m of redundancy payments related to axing 38 positions is included in the projected cash runway, as is the expected $1-2m cost of terminating the Presidio acquisition (BioCryst investors breathe sigh of relief, but what’s next?, December 3, 2012). The pressure to deliver is on, and chief executive Jon Stonehouse, whose total pay package amounted to $1.3m last year, will be watched especially closely by disgruntled investors.

But it is not immediately obvious where to look for inspiration. BioCryst’s focus will be on a thin pipeline of three early-stage assets in hereditary angioedema, viral haemorrhagic fever and hepatitis C; given the setbacks it seems that the second of these, the broad-spectrum antiviral BCX4430, represents BioCryst’s most realistic chance of success.

There might be some reason for excitement here, were it not for the extremely early stage of BCX4430’s development. BioCryst hopes to benefit from US government grants and stockpiling opportunities, for instance against Ebola or Marburg fever, and development will also benefit from the US FDA’s animal efficacy rule.

With five drugs already approved for hereditary angioedema, and Gilead running away with the big hep C prize, the ships in these two indications have probably sailed. BioCryst touts the oral dosing of BCX4161 as a hereditary angioedema “game changer” – with fingers crossed that November’s clinical hold will delay the start of phase I by just three months.

Likewise, it is far from clear whether there is any life left in BCX5191, the hep C project whose IND was recently withdrawn, and the outcome of a chimpanzee study will determine whether there is a way forward.

Wild card?

The pipeline being what it is, investors might just view a wild card – the gout project ulodesine – as the cornerstone of BioCryst’s investment case, especially given the creeping industry interest in this disease.

No development has been done on ulodesine since phase II data were reported in June, and further work depends on BioCryst finding a partner willing to fund phase III. Helpfully, the company says it has “a sense of urgency” regarding a licensing deal.

But it remains a sad indictment of its lack of ideas that, even after giving half of its employees a nasty Christmas present, it could not keep its share price from falling.

As far as the markets are concerned the company looks set to enter zombie territory.

To contact the writer of this story email Jacob Plieth in London at jacobp@epvantage.com or follow @JacobEPVantage on Twitter.

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