BioCryst Pharmaceuticals(BCRX) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Presents unaudited condensed consolidated financial statements, including balance sheets, income, cash flow, and equity, with notes on policies and transactions Condensed Consolidated Balance Sheets Total assets decreased by $33.2 million, liabilities by $87.6 million, reducing stockholders' deficit by $54.3 million, with new assets held for sale Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | Change (YoY) | | :-------------------------- | :------------ | :---------------- | :----------- | | Total Assets | $457,188 | $490,420 | $(33,232) | | Total Liabilities | $878,782 | $966,354 | $(87,572) | | Total Stockholders' Deficit | $(421,594) | $(475,934) | $54,340 | | Current assets held for sale | $29,170 | — | $29,170 | | Non-current assets held for sale | $2,825 | — | $2,825 | | Secured term loan | $242,794 | $314,869 | $(72,075) | Condensed Consolidated Statements of Comprehensive Income (Loss) Significant revenue growth and a shift from net loss to net income for Q2 and H1 2025, driven by increased sales and managed expenses Comprehensive Income (Loss) Highlights (in thousands, except per share amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues | $163,353 | $109,332 | $308,887 | $202,093 | | Total operating expenses | $133,567 | $100,571 | $257,874 | $207,820 | | Income (loss) from operations | $29,786 | $8,761 | $51,013 | $(5,727) | | Net income (loss) | $5,085 | $(12,674) | $5,117 | $(48,053) | | Net income (loss) per common share: basic | $0.02 | $(0.06) | $0.02 | $(0.23) | | Net income (loss) per common share: diluted | $0.02 | $(0.06) | $0.02 | $(0.23) | Condensed Consolidated Statements of Cash Flows Positive operating cash flow for H1 2025, a significant improvement from prior year, driven by net income despite substantial debt repayment Cash Flow Highlights (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | Change (YoY) | | :-------------------------------------------------------------------------------- | :------- | :------- | :----------- | | Net cash provided by (used in) operating activities | $13,785 | $(55,052) | $68,837 | | Net cash provided by investing activities | $56,222 | $26,307 | $29,915 | | Net cash used in financing activities | $(73,157) | $(3,014) | $(70,143) | | Net decrease in cash, and cash equivalents, and restricted cash | $(16,398) | $(32,242) | $15,844 | | Cash, cash equivalents and restricted cash: End of period | $89,925 | $80,205 | $9,720 | Condensed Consolidated Statements of Stockholders' Deficit Total stockholders' deficit decreased by $54.3 million from Dec 2024 to June 2025, driven by net income and stock-based compensation Stockholders' Deficit Highlights (in thousands) | Metric | December 31, 2024 | June 30, 2025 | Change | | :-------------------------- | :---------------- | :------------ | :------- | | Total Stockholders' Deficit | $(475,934) | $(421,594) | $54,340 | | Net income (loss) (6 months) | $(48,053) | $5,117 | $53,170 | | Stock-based compensation expense (6 months) | $26,825 | $42,672 | $15,847 | Notes to Condensed Consolidated Financial Statements Provides detailed disclosures on significant accounting policies, financial instruments, and transactions, contextualizing the financial statements Note 1 — Significant Accounting Policies and Concentrations of Risk BioCryst, a global biotech, focuses on rare diseases (HAE, influenza products ORLADEYO, RAPIVAB), expects 12-month funding, operates as one segment, and faces concentration risks - BioCryst is a global biotechnology company focused on improving the lives of people with hereditary angioedema (HAE) and other rare diseases, utilizing structure-guided drug design to develop oral small-molecule and injectable protein therapeutics[31] - Marketed products include oral, once-daily ORLADEYO® for HAE attack prevention and RAPIVAB® (peramivir injection) for acute uncomplicated influenza in the United States[32] - The company believes its financial resources at June 30, 2025, will be sufficient to fund operations for at least the next 12 months[33] - The company operates and manages its business as one reportable and operating segment[34] - Revenue from product sales (ORLADEYO and peramivir) is recognized when the customer obtains control, generally upon delivery, and is recorded at net selling price, including reserves for variable consideration such as government rebates, chargebacks, co-payment assistance, and product returns[43][44][45] - Revenue where the specialty pharmacy is considered the customer was approximately 86% of total net revenues for the three months ended June 30, 2025, and 85% for the six months ended June 30, 2025[98] - The company relies on a single source manufacturer for active pharmaceutical ingredient and finished drug product manufacturing and a single specialty pharmacy for distribution of approved drug product in the United States, posing concentration risks[100] Note 2 — Assets and Liabilities Held for Sale BioCryst agreed to sell its European ORLADEYO business for $250 million upfront, with proceeds to retire debt; assets/liabilities are classified as held for sale - On June 27, 2025, BioCryst entered into a definitive agreement to sell its European ORLADEYO business (BioCryst Ireland Limited) to Neopharmed Gentili S.p.A[108] - Neopharmed will pay $250,000 thousand in upfront consideration, up to an additional $14,000 thousand in contingent milestone payments, and a $15,000 thousand royalty release fee[109] - The transaction is expected to close in the fourth quarter of 2025, with proceeds intended to retire all remaining term debt[109] Assets and Liabilities Held for Sale (June 30, 2025, in thousands) | Category | Amount | | :-------------------------- | :------- | | Current assets held for sale | $29,170 | | Non-current assets held for sale | $2,825 | | Total assets held for sale | $31,995 | | Current liabilities held for sale | $23,708 | | Non-current liabilities held for sale | $454 | | Total liabilities held for sale | $24,162 | Note 3 — Revenue Total revenues significantly increased for Q2 and H1 2025, driven by strong U.S. ORLADEYO sales and higher peramivir revenues Revenue Breakdown (in thousands) | Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total Revenues | $163,353 | $109,332 | $308,887 | $202,093 | | Total ORLADEYO | $156,837 | $108,288 | $291,080 | $197,155 | | ORLADEYO: U.S. | $140,338 | $95,909 | $260,497 | $175,875 | | Other revenues | $6,516 | $1,044 | $17,807 | $4,938 | - Total revenues increased by $54.0 million (49.4%) for the three months and $106.8 million (52.8%) for the six months ended June 30, 2025, compared to the prior year[112] - ORLADEYO revenues increased by $48.5 million (44.8%) for the three months and $93.9 million (47.6%) for the six months ended June 30, 2025, primarily driven by U.S. sales[112] Note 4 — Investments Investments, mainly U.S. Government obligations, decreased by $54.4 million from Dec 2024 to June 2025, classified as available-for-sale Total Investments (Fair Value, in thousands) | Date | Amount | | :---------------- | :------- | | June 30, 2025 | $182,106 | | December 31, 2024 | $236,460 | | Change | $(54,354) | Investment Maturity Profile (June 30, 2025, in thousands) | Maturity | Amount | | :-------------------------- | :------- | | Maturing in one year or less | $172,005 | | Maturing after one year through two years | $10,101 | | Total investments | $182,106 | - As of June 30, 2025, the company had six securities with a total estimated fair value of $59,117 thousand in an unrealized loss position, primarily due to interest rate changes, which are considered temporary[116] Note 5 — Trade Receivables ORLADEYO trade receivables, net, increased by $11.3 million to $87.6 million; collaboration receivables and held-for-sale accounts also rose Trade Receivables Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | Change | | :-------------------------- | :------------ | :---------------- | :------- | | ORLADEYO Receivables, net | $87,575 | $76,282 | $11,293 | | Receivables from collaborations | $3,221 | $2,223 | $998 | | Accounts receivable held for sale | $10,403 | — | $10,403 | Note 6 — Inventory Total inventory, net, primarily ORLADEYO, decreased by $4.0 million to $27.2 million at June 30, 2025, including held-for-sale inventory Inventory Breakdown (in thousands) | Category | June 30, 2025 | December 31, 2024 | Change | | :-------------------------- | :------------ | :---------------- | :------- | | Raw materials | $7,252 | $10,006 | $(2,754) | | Work-in-process | $15,943 | $16,152 | $(209) | | Finished goods | $5,965 | $7,765 | $(1,800) | | Total inventory | $29,160 | $33,923 | $(4,763) | | Reserves | $(1,911) | $(2,649) | $738 | | Total inventory, net | $27,249 | $31,274 | $(4,025) | - As of June 30, 2025, $2,043 thousand of inventory, net, was classified as current assets held for sale, and $549 thousand as non-current assets held for sale[123] Note 7 — Royalty Financing Obligations Royalty financing obligations decreased by $30.1 million to $483.6 million; effective interest rates for RPI and OMERS were 21.7% and 10.1% Royalty Financing Obligations Activity (in thousands) | Metric | December 31, 2024 | June 30, 2025 | Change | | :------------------------------------------------ | :---------------- | :------------ | :------- | | Balance of Royalty financing obligations | $513,729 | $483,583 | $(30,146) | | Non-cash Interest expense (6 months ended June 30, 2025) | — | $26,916 | $26,916 | | Royalty Revenues Payable (6 months ended June 30, 2025) | — | $(57,062) | $(57,062) | Effective Interest Rates (June 30, 2025) | Agreement | Effective Interest Rate | | :------------------------ | :---------------------- | | 2020 RPI Royalty Agreement | 21.7% | | OMERS Royalty Agreement | 10.1% | - Cash paid for interest on royalty financing obligations was $36,921 thousand for the six months ended June 30, 2025, compared to $33,069 thousand for the same period in 2024[139] Note 8 — Debt Pharmakon Loan borrowings decreased by $75.0 million to $248.7 million due to prepayment, incurring a $4.171 million loss on extinguishment, with variable interest - The Pharmakon Loan Agreement provides for an initial $300,000 thousand Tranche A Loan, funded on April 17, 2023[141] Pharmakon Loan Outstanding Borrowings (in thousands) | Date | Amount | | :---------------- | :------- | | June 30, 2025 | $248,704 | | June 30, 2024 | $323,704 | | Change | $(75,000) | - The Tranche A Loan bears interest at a rate equal to the three-month SOFR (no less than 1.75%) plus 7.00%, or SOFR plus 7.25% if a Pharmakon PIK Interest Payment was made[143] - A $75,000 thousand partial prepayment was made on April 18, 2025, resulting in a one-time loss on extinguishment of debt of $4,171 thousand[148] - Interest expense on the Tranche A Loan for the three and six months ended June 30, 2025, was $7,526 thousand and $16,679 thousand, respectively[149] Note 9 — Lease Obligations Operating lease liabilities totaled $8.881 million and finance lease liabilities $3.659 million as of June 30, 2025, with real estate leases expiring by 2033 Lease Liabilities (June 30, 2025, in thousands) | Lease Type | Total Liabilities | | :---------------- | :---------------- | | Operating leases | $8,881 | | Finance leases | $3,659 | Weighted Average Lease Terms and Discount Rates (June 30, 2025) | Lease Type | Remaining Lease Term | Discount Rate | | :---------------- | :------------------- | :------------ | | Operating leases | 9.9 years | 10.71% | | Finance leases | 2.6 years | 9.42% | Note 10 — Stockholders' Equity 209,905 thousand common shares were outstanding as of June 30, 2025, with 71,789 thousand shares reserved for future issuance under compensation plans - Common stock issued and outstanding as of June 30, 2025: 209,905 thousand shares[26] Shares Reserved for Future Issuance (in thousands) | Category | June 30, 2025 | | :------------------------------------------ | :------------ | | Shares reserved for exercises of outstanding stock options | 42,093 | | Shares reserved for vesting of restricted stock units | 9,798 | | Shares reserved for future issuance under the Stock Incentive Plan | 13,332 | | Shares reserved for future issuance under the Inducement Equity Incentive Plan | 1,725 | | Shares reserved for future issuance under the Employee Stock Purchase Plan | 4,841 | | Total shares reserved for future issuance | 71,789 | Note 11 — Stock-Based Compensation Stock-based compensation expense significantly increased to $42.7 million for H1 2025, with higher weighted average grant date fair value for stock options Stock-Based Compensation Expense (in thousands) | Plan | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Incentive Plan | $19,377 | $10,934 | $38,609 | $22,500 | | Inducement Plan | $1,741 | $2,084 | $3,673 | $4,007 | | ESPP | $186 | $155 | $390 | $318 | | Total stock-based compensation expense | $21,304 | $13,173 | $42,672 | $26,825 | Weighted Average Grant Date Fair Value per Share (Stock Options) | Plan | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | | Stock Incentive Plan | $7.12 | $4.56 | | Inducement Equity Incentive Plan | $5.73 | $3.90 | Note 12 — Collaborative and Other Relationships BioCryst has collaborations for ORLADEYO (Torii, Pint Pharma) and peramivir (HHS, Shionogi, Green Cross); Torii royalties increased, while HHS will not exercise additional RAPIVAB orders - The Commercialization and License Agreement with Torii Pharmaceutical Co., Ltd. for ORLADEYO in Japan was amended on November 30, 2023, increasing tiered royalty payments to BioCryst from 20-40% to 20-80% of annual net sales[168][171] - The HHS awarded BioCryst a contract for up to $69,388 thousand for RAPIVAB, but on May 15, 2025, ASPR notified the company of its intent not to exercise any additional optional ordering periods[174] - BioCryst entered into a license agreement with Clearside Biomedical, Inc. on November 3, 2023, to develop avoralstat with Clearside's SCS Microinjector® for diabetic macular edema (DME). Clearside received a $5,000 thousand upfront license fee and is eligible for up to $30,000 thousand in clinical/regulatory milestones and up to $47,500 thousand in sales-based milestones[177][179] Note 13 — Segment Information Operates as a single segment, with consolidated cash, cash equivalents, and investments totaling $285.2 million as of June 30, 2025 - The company operates as one reportable and operating segment, centered around ORLADEYO and its pipeline for rare diseases[180] Consolidated Cash, Cash Equivalents and Investments (in thousands) | Date | Amount | | :---------------- | :------- | | June 30, 2025 | $285,197 | | December 31, 2024 | $341,173 | | Change | $(55,976) | Note 14 — Commitments and Contingencies BioCryst filed a patent infringement lawsuit against Annora Pharma on March 10, 2025, challenging its generic ORLADEYO ANDA and seeking injunctive relief - In January 2025, Annora Pharma Private Limited submitted an ANDA to the FDA seeking approval for a generic version of ORLADEYO, challenging three patents expiring in 2039[184] - On March 10, 2025, BioCryst filed a patent infringement lawsuit in the United States District Court for the District of Delaware against Annora and related entities, asserting infringement and seeking equitable relief to enjoin infringement and delay FDA approval of the ANDA[185] Note 15 — Net Income (Loss) Per Share Basic and diluted net income per share for Q2 and H1 2025 was $0.02, a significant improvement from net losses of $(0.06) and $(0.23) in 2024 Net Income (Loss) Per Common Share | Period | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) per common share: basic | $0.02 | $(0.06) | $0.02 | $(0.23) | | Net income (loss) per common share: diluted | $0.02 | $(0.06) | $0.02 | $(0.23) | - For periods with a net loss (e.g., three and six months ended June 30, 2024), all potentially dilutive securities were excluded from the computation of diluted net loss per share as their effect would be anti-dilutive[188] Note 16 — Subsequent Events On July 24, 2025, a $50 million partial prepayment was made on the Pharmakon Term Loan, incurring a $1.5 million premium and $376 thousand in accrued interest - On July 24, 2025, BioCryst made a $50,000 thousand partial prepayment on the outstanding principal amount under the Pharmakon Term Loan[190] - In conjunction with the prepayment, the company incurred a $1,500 thousand prepayment premium and paid $376 thousand of interest accrued[190] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial condition and results, highlighting products, recent developments, performance comparisons, liquidity, capital, and critical accounting estimates Overview BioCryst is a global biotech focused on rare diseases, developing first-in-class therapeutics, aiming for commercial success and self-funding through profitability - BioCryst is a global biotechnology company focused on improving the lives of people with hereditary angioedema (HAE) and other rare diseases[192] - The company leverages expertise in structure-guided drug design to develop first-in-class or best-in-class oral small-molecule and injectable protein therapeutics[192] - The business strategy includes successful commercialization and self-funding efforts by achieving and increasing profitability, particularly by focusing on rare disease markets to control costs[192] Products and Product Candidates BioCryst's portfolio includes ORLADEYO (HAE, pediatric NDA pending), pipeline candidates BCX17725 (Netherton), avoralstat (DME), a complement program, and RAPIVAB (influenza) - ORLADEYO® (berotralstat) is an oral, once-daily therapy for the prevention of HAE attacks, approved in the United States and other global markets for patients 12 years and older. An NDA for an oral granule formulation for pediatric patients aged 2 to 11 years is under FDA priority review[193][209] - The global commercial market for ORLADEYO is anticipated to reach a peak of $1 billion in annual net revenues, with approximately 80% expected from the United States[194] - BCX17725 is an investigational KLK5 inhibitor for Netherton syndrome, with an IND cleared by the FDA and a Phase 1 trial open in Australia. It received Fast Track designation from the FDA on July 30, 2025, with initial data expected by year-end[196][197][216][217] - Avoralstat, an investigational plasma kallikrein inhibitor, is being developed with Clearside Biomedical's SCS Microinjector® for diabetic macular edema (DME). The first clinical trial was authorized in Australia, with initial data expected by year-end[198][218] - The complement program aims to develop first-in-class and/or best-in-class compounds across multiple pathways (classical, lectin, terminal, and alternative) to treat complement-mediated diseases, including oral C5 and C2 inhibitors, and a bifunctional complement inhibitor[199][200][201][202] - RAPIVAB® (peramivir injection) is approved in the United States for acute uncomplicated influenza in patients six months and older and is a key component of the U.S. Government's influenza preparedness efforts[203] Revenues and Expenses Revenues and operating expenses are difficult to predict, influenced by regulatory approvals, commercialization, market acceptance, and R&D costs, making comparisons unreliable - Revenues are difficult to predict and depend on regulatory approval decisions, effectiveness of commercialization efforts, market acceptance of products (especially ORLADEYO), and licensing agreements[204] - Operating expenses are also difficult to predict, influenced by research and development, drug manufacturing, clinical research, commercialization costs, and regulatory guidance[205] - Management can control the timing and level of R&D and SG&A expenses, but many expenditures are contractually committed[205] Recent Developments Recent developments include pediatric ORLADEYO NDA, BCX17725 IND/Fast Track, avoralstat trial, Pharmakon prepayments, European ORLADEYO sale, and leadership changes - The percentage of U.S. HAE patients preferring oral prophylaxis therapy increased to 70% in 2025, up from 50% in 2023[207] - FDA accepted the NDA for ORLADEYO in pediatric HAE patients aged 2 to 11 years, granting priority review with a PDUFA target action date of December 12, 2025 (extended from September 12, 2025)[208][209] - ORLADEYO received reimbursement approval in the Netherlands, marking national reimbursement across all major European countries, and approval in Colombia for patients aged 12 years and older[212][213] - FDA cleared the IND for BCX17725 for Netherton syndrome, enabling U.S. clinical trials, and granted Fast Track designation on July 30, 2025. Initial data is expected by year-end[216][217] - The first clinical trial with suprachoroidal delivery of avoralstat was authorized in Australia, with initial data expected by year-end[218] - Partial prepayments of $75.0 million (April 18, 2025) and $50.0 million (July 24, 2025) were made on the Pharmakon Loan Agreement[219] - An agreement was signed to sell the European ORLADEYO Business to Neopharmed Gentili S.p.A. for $250.0 million upfront, plus potential milestones, with proceeds planned to retire remaining term debt. The transaction is expected to close in October 2025[220][221] - Leadership changes include Jon Stonehouse's retirement as CEO (effective Dec 31, 2025), Charlie Gayer's appointment as President (Aug 1, 2025) and future CEO (Jan 1, 2026), and Babar Ghias's appointment as CFO and Head of Corporate Development (July 7, 2025)[222] Results of Operations (three months ended June 30, 2025 compared to the three months ended June 30, 2024) For Q2 2025, revenues increased by $54.0 million to $163.4 million, driven by ORLADEYO and peramivir; operating expenses rose, interest expense decreased, resulting in $5.1 million net income from a prior year loss - Total revenues increased by $54.0 million (49.4%) to $163.4 million, primarily due to a $48.6 million increase in ORLADEYO net revenue and a $5.5 million increase in other revenues (peramivir)[223] - Cost of product sales increased to $2.8 million from $1.7 million, mainly due to higher peramivir sales and inventory reserves[224] - Research and development expenses increased by $5.8 million (15.4%) to $43.4 million, driven by preclinical/early clinical work for avoralstat, BCX17725, and early-phase pipeline programs, and increased stock-based compensation. This was partially offset by the discontinuation of Factor D programs and a shift of berotralstat-related expenses to SG&A[226] - Selling, general and administrative expenses increased by $26.2 million (42.8%) to $87.4 million, primarily due to $5.9 million in transaction costs for the European ORLADEYO Business sale, increased stock-based compensation, and higher ORLADEYO commercial support activities[228] - Interest expense decreased by $3.1 million to $21.6 million, mainly due to the $75.0 million partial prepayment on the Pharmakon Term Loan and a decrease in its effective interest rate[229] - A one-time loss on extinguishment of debt of $4.2 million was recognized due to the Pharmakon Term Loan prepayment[231] - Net income was $5.1 million, a significant improvement from a net loss of $12.7 million in the prior year period[21] Results of Operations (six months ended June 30, 2025 compared to the six months ended June 30, 2024) For H1 2025, revenues increased by $106.8 million to $308.9 million, driven by ORLADEYO and peramivir; R&D decreased, SG&A increased, interest expense decreased, resulting in $5.1 million net income from a prior year loss - Total revenues increased by $106.8 million (52.8%) to $308.9 million, driven by a $93.9 million increase in ORLADEYO net revenue (volume, paid shipments, price) and a $12.9 million increase in other revenues (peramivir)[233] - Cost of product sales increased to $7.4 million from $3.0 million, primarily due to higher peramivir and ORLADEYO sales and inventory reserves[234] - Research and development expenses decreased by $3.5 million (4.1%) to $80.7 million, mainly due to the discontinuation of Factor D programs and a shift of berotralstat-related expenses. This was partially offset by increased spending on avoralstat, BCX17725, and early-phase pipeline programs, and higher stock-based compensation[235] - Selling, general and administrative expenses increased by $49.2 million (40.7%) to $169.9 million, driven by $6.4 million in transaction costs for the European ORLADEYO Business sale, increased stock-based compensation, and higher ORLADEYO commercial support activities[237] - Interest expense decreased by $4.1 million to $45.1 million, primarily due to the $75.0 million partial prepayment on the Pharmakon Term Loan and a decrease in its effective interest rate[238] - A one-time loss on extinguishment of debt of $4.2 million was recognized due to the Pharmakon Term Loan prepayment[240] - Net income was $5.1 million, a substantial improvement from a net loss of $48.1 million in the prior year period[21] Liquidity and Capital Resources Liquidity comes from equity, credit, ORLADEYO revenues, and royalty financing; $248.7 million Pharmakon debt outstanding, with European ORLADEYO sale proceeds planned for retirement, sufficient for 12 months - Primary sources of liquidity include public/private equity offerings, credit facilities, ORLADEYO revenues, royalty financing transactions, and cash from collaborative and other research and development agreements[242] - The company entered into a $450,000 thousand Pharmakon Loan Agreement in April 2023, with an initial $300,000 thousand Tranche A Loan. As of June 30, 2025, $248,704 thousand was outstanding after partial prepayments[243][149] - Proceeds from the pending sale of the European ORLADEYO Business to Neopharmed are planned to retire all remaining outstanding term debt under the Pharmakon Loan Agreement[243] - As of June 30, 2025, principal sources of liquidity were approximately $285.2 million in cash, cash equivalents, and available-for-sale investments, including $15.1 million classified as held for sale[247] - The company believes its financial resources will be sufficient to fund operations for at least the next 12 months, but future liquidity needs will depend on product success and development progression[258] Critical Accounting Estimates Management discusses critical accounting estimates for revenue recognition, inventory valuation, R&D accruals, stock-based compensation, royalty financing interest, and income taxes, all requiring significant judgment - Revenue recognition for product sales involves significant estimates for variable consideration (government rebates, managed care rebates, chargebacks, co-payment assistance, product returns)[269] - Inventory is valued at the lower of cost or estimated net realizable value, requiring significant judgment for valuation reserves for excess, obsolete, short-dated, or unmarketable inventory[280][281] - Research and development expenses, particularly for third-party services, are accrued based on estimates of actual work completed, requiring judgment on expected patient enrollment, site activation, and project duration[286] - Stock-based compensation expense is estimated at the grant date using a Black-Scholes option-pricing model, requiring judgment on stock price volatility and expected term, and is reduced for estimated forfeitures[288] - Interest expense on royalty financing obligations is accrued using the effective interest rate method, which requires estimating total future royalty payments over the life of the agreement, with reassessments made each reporting period[289] - Significant management judgment is required for income taxes, particularly in determining deferred tax assets and liabilities and any valuation allowance against net deferred tax assets, based on estimates of future earnings[291] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company faces interest rate risk on investments and variable-rate debt, manages investment risk with short-maturity securities, has foreign currency exposure, and notes inflation has not materially impacted operations - The company is subject to interest rate risk on its investment portfolio and borrowings under the Pharmakon Loan Agreement, which accrues interest at a variable rate (three-month SOFR plus 7.00% or 7.25%)[294][295] - Investment policy objectives are to preserve capital, maintain liquidity, and earn a competitive return, achieved by investing in high credit quality marketable debt securities with an average maturity of approximately 12 months or less[296][297] - Foreign currency risk arises from operations in various countries, with commercial sales in Europe primarily denominated in Euros and British Pounds, and royalties from Torii in Japanese Yen. Other exposures include Swiss Franc, Danish Krone, Swedish Krona, Norwegian Krone, and Canadian Dollar[299] - Foreign currency transaction gains or losses are not anticipated to be significant at the current level of operations but may increase with international expansion[300] - Inflation could potentially increase operating expenses (cost of product sales, clinical trial costs, selling activities), but has not had a material impact on the business or results of operations during the reported periods[301] Item 4. Controls and Procedures Disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting during the quarter - The company's disclosure controls and procedures were evaluated and concluded to be effective as of June 30, 2025, by the Chief Executive Officer and Chief Financial Officer[303] - No changes in internal control over financial reporting occurred during the three months ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[304] PART II. OTHER INFORMATION Item 1. Legal Proceedings BioCryst filed a patent infringement lawsuit against Annora Pharma on March 10, 2025, challenging its generic ORLADEYO ANDA and seeking injunctive relief for patents expiring in 2039 - In January 2025, Annora Pharma Private Limited submitted an Abbreviated New Drug Application (ANDA) to the FDA for a generic version of ORLADEYO, challenging three patents (U.S. Patent Nos. 10,662,160; 11,117,867; and 11,618,733) that expire in 2039[306] - On March 10, 2025, BioCryst filed a patent infringement lawsuit in the United States District Court for the District of Delaware against Annora and related entities, asserting infringement and seeking equitable relief to enjoin the defendants and an order to delay the effective date of any FDA approval of the ANDA[307] Item 1A. Risk Factors This section details various risks including financial, operational, commercialization, competition, legal, intellectual property, and international risks that could adversely affect the company's business - The company may never achieve sustained profitability and may need to raise additional capital in the future, which may not be available on acceptable terms, potentially forcing adjustments to operations or cessation[309][311][313] - The pendency or failure to complete the proposed sale of the European ORLADEYO Business to Neopharmed could disrupt operations, affect relationships, divert management resources, and impact future revenues and stock price[315][318] - Success depends on managing the product candidate pipeline, advancing candidates through complex and uncertain clinical trials, and receiving/maintaining regulatory approvals, with risks including failure to demonstrate efficacy/safety, adverse events, and inadequate trial design[325][326][327] - Heavy reliance on third parties (development partners, CROs, manufacturers, distributors) for many stages of product development and commercialization poses risks of delays, failures, or inability to retain alternative providers[333][334][362] - The biotechnology and pharmaceutical industries are highly competitive, with many competitors possessing greater resources and experience, potentially leading to reduced demand for BioCryst's products or rendering its technologies obsolete[370][371][375] - The company is subject to extensive and evolving laws and regulations (e.g., FDA, healthcare fraud and abuse, pricing, data privacy), with non-compliance potentially leading to substantial penalties, reputational harm, and increased costs[376][378][389][395] - Protecting and enforcing intellectual property rights is critical but uncertain, with risks of patent infringement, generic competition (e.g., ORLADEYO ANDA challenge), costly litigation, and potential loss of trade secrets[398][400][401] - Significant indebtedness under the Pharmakon Loan Agreement ($248.7 million outstanding as of June 30, 2025) increases vulnerability to adverse economic conditions, limits financial flexibility, and imposes restrictive covenants that could trigger early repayment or foreclosure on assets[420][421][422][424] - International expansion exposes the company to business, legal, regulatory, political, operational, financial, and economic risks, including conflicting laws, difficulties in obtaining approvals, foreign currency fluctuations, and governmental pricing controls[425][427][428] - Dependence on information technology systems and increasing use of artificial intelligence (AI) present risks of cyber incidents, data breaches, operational outages, loss of intellectual property, and challenges in managing AI use, potentially leading to legal liabilities and reputational harm[441][442][446] - The company's stock price has been and is likely to remain highly volatile due to various factors, including clinical trial results, regulatory developments, competition, financial performance, and external economic conditions, which could cause the value of an investment to decline significantly[464][465] Item 5. Other Information No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted or terminated by directors or officers during Q2 2025 - None of the company's directors or officers adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during the three months ended June 30, 2025[480] Item 6. Exhibits This section lists various exhibits filed with the 10-Q report, including the Stock Purchase Agreement, corporate charter documents, employment agreements, stock incentive plans, and certifications - Key exhibits include the Stock Purchase Agreement (2.1), Third Restated Certificate of Incorporation (3.1-3.5), Amended and Restated By-Laws (3.6), Consulting Agreement (10.1), Amendment No. 1 to Consulting Agreement (10.2), Amended and Restated Employment Agreement (10.3), Amendment No. 2 to Employment Agreement (10.4), BioCryst Pharmaceuticals, Inc. Stock Incentive Plan (10.5), and various certifications (31.1, 31.2, 32.1, 32.2)[481][482] SIGNATURES The report was signed by Jon P. Stonehouse, Chief Executive Officer, and Babar Ghias, Chief Financial Officer, on August 5, 2025[486]