BCRX -- A Group of Longs From StockTwits Make Their Case
Editors note: some of this is now out of date, but things have only gotten better. Orladeyo approved in US UK,EU, Japan, and 9930 data is phenomenal and has entered P3 trials for PNH, and P1 trials for 3 renal diseases
The Shorts - The Side Show
Let’s be honest, the real reason anyone is in WSB right now is to fist shorts. BCRX, however, is also a company that needs to gap up to reach fair value. Fist the shorts and hold the gains.
Biocryst has a high and steadily growing institutional ownership currently reported at 71%. Biocryst has a float of 175m (124m of which are held by institutions), who are buying every share they can and not likely to sell any time soon. This leaves 56m tradable shares. The shorts have 30m shares or 70% of the tradable float. This is not as big as the $GME naked short taken on by u/DeepFuckingValue. But, we think this is a stock that if it gaps up can hold the gain based on value. Institutions run an algorithm almost every day and short the stock (check the charts). We can make these fuckers squirm with the slightest effort.
Rating: 🚀🚀🚀🚀/10
Orladeyo - The Prelude
Orladeyo has recently been approved in the US and Japan to treat Hereditary Angioedema(European approval expected shortly). HAE is a rare disease that affects roughly 1/50,000 people, or about ~25,000 people in the three regions mentioned previously.
Orladeyo treats a rare disease and that means the medication is expensive. It costs $485,000/year in the US and will roughly cost half of that in Japan and the EU. The company has projected they will capture 40% of the market (page 15). Capturing 40% of the market is a share price of $70 when trading at a reasonable (if not conservative) 7x revenue multiple. Work your own numbers and you’ll find SP should be more than $9 and the current market cap of 1.6 billion. FDA approval of Orladeyo enabled BioCryst to cross a bridge from a small unprofitable research company to expanding commercial biotech now engaged in execution.
Rating: 🚀🚀🚀🚀/10
Factor D - The Main Event
Factor D is the blockbuster. Full stop. The company is already pursuing PNH but has indicated their intended subsequent targets for this drug. They’re small targets like “Lupus” and “IGA Nephropathy” along with 6 others (page 24) and it’s already being hailed as “best in class”
So what’s this look like money wise? Alexion’s drugs SOLIRIS® and ULTOMIRIS® are the current treatment for PNH those make up 4.3B of their 5B revenues. AstraZeneca just bought them out for a whopping 39B. If Factor D receives same valuation, that alone puts SP at $222 given our float. The sky is truly the limit over the next 24-48 months. The point is, the company is ready to gap up on merit, but is being held back by high short activity.
Rating: 🚀🚀🚀🚀🚀🚀🚀🚀🚀🚀/10
Galidesivir - The Wild Card
If you aren’t already excited, maybe you’ll be excited by a drug that provides 90% protection against Ebola when dosed 72 hours post exposure. Huge Ebola outbreak? BioTerror attack in a major city? Think humanity might end in a pandemic more lethal than covid with people hemorrhaging blood from their eyes? No problem. Just distribute the galidesivir and most everyone will be protected. (Animal studies suggest high protection against Zika, Yellow Fever, Marburg, Tick Borne Encephalitis and others).
Why didn’t we already have this drug? That’s anyone’s guess, but politics seems to have something to do with it. No one can yet determine the value or ultimate use of galidesivir as it is tied up in government development contracts. The company has already stated that it is developing galidesivir for government contracts and shareholders seem to have little to do with this. So, we’ll just call this the sleeping wild card.
Rating: 🕵🏽♂️ 🛸
FOP- The Feel Good Drug
This is not a money maker. But, in case you haven’t found a soft spot for this company, they appear close to a first time cure for an extremely rare disease called FOP. It slowly (and painfully) cripples children when their joints fuse together with excess bone. Children affected by FOP often end up wheelchair bound by age 11. Can’t tell you this drug will be a money maker as the affected population is too small. But, gosh, don’t you want the company to succeed?
Rating: ❤️
The Competition - The Class Clowns
Disease: Hereditary Angioedema (HAE)
For the prophylactic (preventative) market, the competitors are Cinryze, Takhzyro (from Takeda) which are IVF and subcutaneous injections respectively. Haegarda (CSL Behring) has a subcutaneous injection as well. Orladeyo recently received FDA approval to be the first and only oral prophylactic treatment for HAE.
The patents of the competitors expire in 2032 and no generics are expected on the market before 2032. Orladeyo was granted extended patent protection until 2037. Royalty Pharma did a deep dive on BioCryst’s expected Orladeyo revenues when it agreed to royalty financing that enabled BCRX to fast track Factor D development and expand it to 8 clinical indications.
Disease: Paroxysmal Nocturnal Hemoglobinuria (PNH)
Alexion holds the sole drug Soliris and its spin off Ultomiris (both IVF C5 inhibitors) to treat the rare blood disorder PNH. Alexion has market exclusivity until 2025 for Soliris. This activist letter and this article highlight that analysts believe the 39B purchase of Alexion was a fire sale due to mismanagement. If Factor D received at least the same discounted valuation as ALXN, that would mean its market cap would increase from 1.6B to 39B. Excited?
Factor D is expected not just to be equivalent to Soliris, but exceed it. BioCryst Medical Director Bill Sheridan believes Factor D will make competitors “obsolete” as it cures patients earlier in the disease process than C5 and C3 inhibitors. Unlike competitors, Factor D will also be both an oral pill *and* a monotherapy. In other words, there’s not much competition. Also, PNH is only the first of 8 serious illnesses expected to be treated by Factor D.
The Insiders
Still not convinced? CFO Anthony Doyle joined BioCryst April 02, 2020. Four months after joining the company he used $220,320 of his own money to purchase shares in BioCryst ATM. As he is mortal like the rest of us, we assume CFO Anthony Doyle also pays taxes. Therefore, it appears as if he put the entirety of his after tax salary, for a whole year, into aligning himself with shareholders. Famed biotech investor Alex Denner has also been accumulating a passive position, ATM, right next to retail, as recently as a couple weeks ago.
Rating: 🚀🚀🚀🚀🚀🚀🚀🚀🚀/10
Too Many Good Things?
BCRX researched small molecules and crystalline structures for years. If that’s opaque, the easier way to think of it is they first developed an engine and are now in execution and placing the engine into cars.
No More Shareholder Dilutions
If your interest is perking, you’ll be happy to hear CEO John Stonehouse promised(listen to question and answer section) there will be no shareholder dilutions, as all company operations are funded into 2023. The company does not plan to revise guidance.
This post was prepared by a group of longs on stocktwits. Come, join us.
Not investment advice, just some DD by some longs.