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What changed in BIOCRYST PHARMACEUTICALS INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of BIOCRYST PHARMACEUTICALS INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+589 added−508 removedSource: 10-K (2024-02-27) vs 10-K (2023-02-27)

Top changes in BIOCRYST PHARMACEUTICALS INC's 2023 10-K

589 paragraphs added · 508 removed · 354 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

109 edited+97 added−41 removed132 unchanged
Biggest changeApellis Pharmaceuticals, Inc.’s Empaveli® is a C3 inhibitor approved for PNH in the United States and Europe in 2021. 14 Table of Contents We are aware of a number of complement pathway-based products in development, which include: Company Asset Mechanism of Action Route of Administration Trial Phase Apellis Empaveli C3 Inhibitor Subcutaneous Approved Akari Nomacopan C5 Inhibitor Subcutaneous III Roche Crovalimab (RG6107) C5 Inhibitor IV / Subcutaneous III Regeneron Pozelimab C5 Inhibitor IV / Subcutaneous III Omeros Narsoplimab OMS906 MASP-2 Inhibitor MASP-3 Inhibitor IV / Subcutaneous Subcutaneous BLA I AstraZeneca Danicopan (ALXN2040) Vermicopan (ALXN2050) Factor D Inhibitor Factor D Inhibitor Oral Oral III II Novartis Iptacopan (LNP023) Tesidolumab Factor B Inhibitor C5 Inhibitor Oral IV III II ChemoCentryx Tavneos (avacopan) C5aR Inhibitor Oral Approved Ra / UCB Zilucoplan C5 Inhibitor Subcutaneous II Alnylam Cemdisiran C5 Inhibitor Subcutaneous II Amgen (Phase 3), Samsung, and Isu Abxis are also in clinical trials developing biosimilars of eculizumab.
Biggest changeWe are aware of a number of complement pathway-based products in development, which include: Company Asset Mechanism of Action Route of Administration Trial Phase Apellis Empaveli® (pegcetacoplan) C3 Inhibitor Subcutaneous Approved Akari Nomacopan C5 Inhibitor Subcutaneous III Roche Crovalimab (RG6107) C5 Inhibitor IV / Subcutaneous Filed (approved outside U.S.) Regeneron Pozelimab C5 Inhibitor IV / Subcutaneous III Omeros Narsoplimab OMS906 MASP-2 Inhibitor MASP-3 Inhibitor IV / Subcutaneous Subcutaneous BLA I AstraZeneca Danicopan (ALXN2040) Factor D Inhibitor Oral Filed (approved outside U.S.) Gefurulimab (ALXN1720) C5 Inhibitor Subcutaneous III Vemircopan (ALXN2050) Factor D Inhibitor Oral II Novartis Fabhalta® (Iptacopan) Factor B Inhibitor Oral Approved Amgen Tavneos® (avacopan) C5aR Inhibitor Oral Approved Ra / UCB Zilbrysq® (Zilucoplan) C5 Inhibitor Subcutaneous Approved Alnylam Cemdisiran C5 Inhibitor Subcutaneous II 15 Table of Contents Amgen (Phase 3), Samsung (marketed in Europe and Japan as EPYSQLI®), and Isu Abxis are also in clinical trials developing biosimilars of eculizumab.
Takhzyro® (lanadelumab-flyo) is a monoclonal antibody approved for prophylaxis of HAE attacks and can be self-administered as a subcutaneous injection. • Bradykinin receptor antagonist — Firazyr® (icatibant) and generic icatibant are indicated for the treatment of acute attacks and is administered by subcutaneous administration. • Other medications — Prophylactic administration of synthetic attenuated androgens (generically available as danazol or stanozolol) has been utilized to reduce the frequency or severity of attacks.
Takhzyro® (lanadelumab-flyo) is a monoclonal antibody approved for prophylaxis of HAE attacks and can be self-administered as a subcutaneous injection. • Bradykinin receptor antagonist — Firazyr® (icatibant) and generic icatibant are indicated for the treatment of acute attacks and are administered by subcutaneous administration. • Other medications — Prophylactic administration of synthetic attenuated androgens (generically available as danazol or stanozolol) has been utilized to reduce the frequency or severity of attacks.
Failure to comply with applicable FDA and other regulatory requirements at any stage during the regulatory process may subject us to sanctions, including: • delays; • warning letters; • fines; • product recalls or seizures; • injunctions; • penalties; • refusal of the FDA or any foreign regulatory authority to review pending market approval applications or supplements to approval applications; • total or partial suspension of production; • civil penalties; • withdrawals of previously approved marketing applications; and • criminal prosecutions.
Failure to comply with applicable FDA and other regulatory requirements at any stage during the regulatory process may subject us to sanctions, including: • delays; • warning or untitled letters; • fines; • product recalls or seizures; • injunctions; • penalties; • refusal of the FDA or any foreign regulatory authority to review pending market approval applications or supplements to approval applications; • total or partial suspension of production; • civil penalties; • withdrawals of previously approved marketing applications; and • criminal prosecutions.
We start by selecting disease targets with well-understood biology and characteristics that fit with our ability to utilize structure-guided drug design capabilities to build potent and specific enzyme inhibitors. Next, we narrow our selection of these product candidates based on product characteristics, such as initial indications of safety and biologic activity on the target. • Developing our Product Candidates Efficiently.
We start by selecting disease targets with well-understood biology and characteristics that fit with our ability to utilize structure-guided drug design capabilities to build potent and specific inhibitors. Next, we narrow our selection of these product candidates based on product characteristics, such as initial indications of safety and biologic activity on the target. • Developing our Product Candidates Efficiently.
We licensed a series of potent inhibitors of Purine Nucleoside Phosphorylase from AECOM and IRL, as well as an exclusive worldwide license of galidesivir for any antiviral use, and we have agreements with UAB for influenza neuraminidase and complement inhibitors.
We licensed a series of potent inhibitors of purine nucleoside phosphorylase (“PNP”) from AECOM and IRL, as well as an exclusive worldwide license of galidesivir for any antiviral use, and we have agreements with UAB for influenza neuraminidase and complement inhibitors.
Shionogi Royalty Monetization and Non-Recourse Notes Payable On March 9, 2011, we completed a $30.0 million financing transaction to monetize certain future royalty and milestone payments under the Shionogi Agreement.
Shionogi Royalty Financing and Non-Recourse Notes Payable On March 9, 2011, we completed a $30.0 million financing transaction to monetize certain future royalty and milestone payments under the Shionogi Agreement.
On January 26, 2023, we announced the enrollment of the first patient in the pivotal APeX-P trial evaluating ORLADEYO in pediatric HAE patients who are 2 to On February 21, 2023, we announced that the Canadian Agency for Drugs and Technologies in Health Canadian Drug Expert Committee has recently issued a final draft positive recommendation for ORLADEYO to be reimbursed for the routine prevention of HAE attacks in adults and pediatric patients 12 years of age and older.
On January 26, 2023, we announced the enrollment of the first patient in the pivotal APeX-P trial evaluating ORLADEYO in pediatric HAE patients who are 2 to On February 21, 2023, we announced that the Canadian Agency for Drugs and Technologies in Health Canadian Drug Expert Committee issued a final draft positive recommendation for ORLADEYO to be reimbursed for the routine prevention of HAE attacks in adults and pediatric patients 12 years of age and older.
On January 9, 2023, we announced that initial data from ongoing phase 1 single ascending dose and multiple ascending dose trials in healthy volunteers showed rapid, sustained and >97 percent suppression of the alternative pathway of the complement system 24 hours following a single 110 mg dose, and that BCX10013 has been safe and generally well-tolerated at all doses studied to date.
On January 9, 2023, we announced that initial data from ongoing phase 1 single ascending dose and multiple ascending dose trials in healthy volunteers showed rapid, sustained and >97 percent suppression of the alternative pathway of the complement system 24 hours following a single 110 mg dose, and that BCX10013 had been safe and generally well-tolerated at all doses studied to date.
Entities that are found to be in violation of HIPAA or that enter into a resolution agreement with the HHS to settle actual or potential allegations of HIPAA noncompliance may be subject to significant civil, criminal, and administrative fines and penalties and/or additional reporting and oversight obligations. Many state laws govern the privacy of personal information in specified circumstances.
Entities that are found to be in violation of HIPAA or that enter into a resolution agreement with the HHS to settle actual or potential allegations of HIPAA noncompliance may be subject to significant civil, criminal, and administrative fines and penalties and/or additional reporting and oversight obligations. Many state laws govern the privacy of personal data in specified circumstances.
If left untreated, HAE can result in a mortality rate as high as 40% primarily due to upper airway obstruction. There are several licensed therapies for HAE, including the following: • C1-INH replacement therapy is available as an acute therapy (Berinert®) and as a prophylactic therapy (Haegarda® and Cinryze®). These therapies are dosed subcutaneously and intravenously.
If left untreated, HAE can result in a mortality rate as high as 50% primarily due to upper airway obstruction. There are several licensed therapies for HAE, including the following: • C1-INH replacement therapy is available as an acute therapy (Berinert®) and as a prophylactic therapy (Haegarda® and Cinryze®). These therapies are dosed subcutaneously and intravenously.
The transactions contemplated under the Royalty Purchase Agreements are referred to herein as the “Royalty Sales.” See “Note 8—Royalty Monetizations—ORLADEYO and Factor D Inhibitors” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this report for additional information about our obligations under the Royalty Purchase Agreements.
The transactions contemplated under the Royalty Purchase Agreements are referred to herein as the “Royalty Sales.” See “Note 8—Royalty Financing Obligations—ORLADEYO and Factor D Inhibitors” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this report for additional information about our obligations under the Royalty Purchase Agreements.
Further, the duration of the approval process may be exacerbated by global health concerns or other 15 Table of Contents considerations that could prevent regulatory authorities from conducting their inspections, reviews, or other regulatory activities that could significantly impact the ability of such authorities to timely review and process our regulatory submissions.
Further, the duration of the approval process may be exacerbated by global health concerns or other considerations that could prevent regulatory authorities from conducting their inspections, reviews, or other regulatory 16 Table of Contents activities that could significantly impact the ability of such authorities to timely review and process our regulatory submissions.
Approved drugs that are manufactured or distributed in the United States pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements relating to recordkeeping, periodic reporting, product sampling and distribution, advertising and promotion, and reporting of adverse experiences with the product.
Post-Approval Approved drugs that are manufactured or distributed in the United States pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements relating to recordkeeping, periodic reporting, product sampling and distribution, advertising and promotion, and reporting of adverse experiences with the product.
European data protection authorities may interpret the GDPR and national laws differently and impose additional requirements, which add to the complexity of processing personal data in or from the EEA, the United Kingdom, or Switzerland. Guidance on implementation and compliance practices are often updated or otherwise revised.
Local data protection authorities may interpret the GDPR and national laws differently and impose additional requirements, which add to the complexity of processing personal data in or from the EEA, the United Kingdom, or Switzerland. Guidance on implementation and compliance practices are often updated or otherwise revised.
Our structure-guided drug design technologies typically allow us to design and synthesize multiple product candidates that inhibit the same enzyme target, with the goal of establishing broad intellectual property protection and formulating compounds with competitive advantages. • Selecting Inhibitors that are Promising Product Candidates.
Our structure-guided drug design technologies typically allow us to design and synthesize multiple product candidates that inhibit the same protein target, with the goal of establishing broad intellectual property protection and formulating compounds with competitive advantages. • Selecting Inhibitors that are Promising Product Candidates.
As of December 31, 2022, we have delivered a total of 49,980 RAPIVAB doses of the 50,000 RAPIVAB doses available under the procurement contract, effectively completing the contract with HHS, and all of our government funding for galidesivir has expired.
As of December 31, 2022, we had delivered a total of 49,980 RAPIVAB doses of the 50,000 RAPIVAB doses available under the procurement contract, effectively completing the contract with HHS, and all of our government funding for galidesivir has expired.
However, long-term use of danazol or stanozolol may result in liver damage, virilization and arterial hypertension. Six-month liver function tests, annual lipid profiles, and biennial hepatic ultrasound are recommended for patients on chronic androgen therapy. We are aware of a number of HAE therapies in clinical development that, if approved, may compete with ORLADEYO.
However, long-term use of danazol or stanozolol may result in liver damage, virilization and arterial hypertension. Six-month liver function tests, annual lipid profiles, and biennial hepatic ultrasound are recommended for patients on chronic androgen therapy. 14 Table of Contents We are aware of a number of HAE therapies in clinical development that, if approved, may compete with ORLADEYO.
See “Note 8—Royalty Monetizations—ORLADEYO and Factor D Inhibitors” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this report for additional information about our obligations under the RPI Royalty Purchase Agreements.
See “Note 8—Royalty Financing Obligations—ORLADEYO and Factor D Inhibitors” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this report for additional information about our obligations under the RPI Royalty Purchase Agreements.
The European Union is in the process of replacing the e-Privacy Directive (2002/58/EC) with a new set of rules taking the form of a regulation that will be directly implemented in the laws of each EU member state.
For example, the European Union is in the process of replacing the e-Privacy Directive (2002/58/EC) with a new set of rules taking the form of a regulation that will be directly implemented in the laws of each EU member state.
Structure-guided drug design is a process by which we design a product candidate through detailed structural analysis of the enzyme target, which the product candidate must inhibit in order to stop the progression of the disease or disorder.
Structure-guided drug design is a process by which we design a product candidate through detailed structural analysis of the protein target, which the product candidate must inhibit in order to stop the progression of the disease or disorder.
Many companies, including biotechnology, chemical and pharmaceutical companies, are actively engaged in activities similar to ours, including research, development, and commercialization of drugs for the treatment of rare medical conditions. Many of these companies have substantially greater financial and other resources, larger research and development staffs, and more extensive commercial and manufacturing organizations than we do.
Many companies, including biotechnology, chemical and pharmaceutical companies, are actively engaged in activities similar to ours, including research, development, and commercialization of drugs for the treatment of rare medical conditions. Many of these 13 Table of Contents companies have substantially greater financial and other resources, larger research and development staffs, and more extensive commercial and manufacturing organizations than we do.
Generally, all payments under the Shionogi Agreement are non-refundable and non-creditable, but they are subject to audit. Shionogi is responsible for all development, regulatory, and marketing costs in Japan. The term of the Shionogi Agreement is from February 28, 2007 until terminated. Either party may terminate the Shionogi Agreement in the event of an uncured breach.
Generally, all payments under the Shionogi Agreement are non-refundable and non-creditable, but they are subject to audit. Shionogi is responsible for all development, regulatory, and marketing costs in Japan. The term of the Shionogi Agreement is from February 28, 2007 until terminated. Either party may terminate the Shionogi Agreement in the event of 11 Table of Contents an uncured breach.
We believe that structure-guided drug design is a powerful tool for the efficient development of small-molecule product candidates that have the potential to be safe and effective.
We believe that structure-guided drug design is a powerful tool for the efficient development of small-molecule and protein therapeutic product candidates that have the potential to be safe and effective.
( “ Torii ” ) On November 5, 2019, we entered into a Commercialization and License Agreement with Torii (the “Torii Agreement”), granting Torii the exclusive right to commercialize ORLADEYO for the prevention of HAE attacks in Japan. Under the Torii Agreement, we received an upfront, non-refundable payment of $22.0 million.
( “ Torii ” ) On November 5, 2019, we entered into a Commercialization and License Agreement with Torii (the “Original Torii Agreement”), granting Torii the exclusive right to commercialize ORLADEYO for the prevention of HAE attacks in Japan. Under the Original Torii Agreement, we received an upfront, non-refundable payment of $22.0 million.
Governments have shown significant interest in implementing cost-containment programs, including price controls, restrictions on reimbursement, and requirements for substitution of generic products. Adoption of price controls and cost-containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures, could limit our net revenue and results.
Governments have shown significant interest in implementing cost-containment programs, including price controls, 23 Table of Contents restrictions on reimbursement, and requirements for substitution of generic products. Adoption of price controls and cost-containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures, could limit our net revenue and results.
Under the RPI Royalty Purchase Agreements, RPI will be entitled to receive tiered, sales-based royalties on net product sales, if any, of BCX10013, as well as tiered, profit share amounts of up to 3.0% from certain other permitted sales in certain markets.
Under the RPI Royalty Purchase Agreements, RPI will be entitled to receive tiered, sales-based royalties on net product sales, if any, of BCX10013, as well as tiered, profit share amounts from certain other permitted sales in certain markets.
Products and Product Candidates ORLADEYO (Berotralstat) ORLADEYO is an oral, once-daily therapy discovered and developed by us for the prevention of hereditary angioedema (“HAE”) attacks. HAE is a rare, severely debilitating and potentially fatal genetic condition with a prevalence of between 1 in 33,000 to 1 in 67,000 people.
Products and Product Candidates ORLADEYO (Berotralstat) ORLADEYO is an oral, once-daily therapy discovered and developed by us for the prevention of hereditary angioedema (“HAE”) attacks. HAE is a rare, severely debilitating and potentially fatal genetic condition with an estimated 6 Table of Contents prevalence of between 1 in 33,000 to 1 in 67,000 people.
Any amendment to, or waiver from, our Code of Conduct will be posted on our website. 23 Table of Contents
Any amendment to, or waiver from, our Code of Conduct will be posted on our website. 27 Table of Contents
For example, in California the California Consumer Privacy Act (“CCPA”) establishes a privacy framework for covered businesses by creating an expanded definition of personal information, establishing data privacy rights for consumers in the State of California, imposing special rules on the collection of consumer data from minors, and creating a potentially severe statutory damages framework for violations of the CCPA and for businesses that fail to implement reasonable security procedures and practices to prevent data breaches.
For example, in California the California Consumer Privacy Act of 2018, as amended by the California Privacy Rights Act of 2020 (together, “CCPA”) establishes a privacy framework for covered businesses by creating an expanded definition of personal data, establishing data privacy rights for consumers in the State of California, imposing special rules on the collection of consumer data from minors, and creating a potentially severe statutory damages framework for violations of the CCPA and for businesses that fail to implement reasonable security procedures and practices to prevent data breaches.
We strive to advance our product candidate portfolio from discovery to commercial markets efficiently by utilizing a small group of talented and highly-skilled employees working in conjunction with strategic outsource partners. We are unique in our approach to treat orphan diseases with orally-administered, small molecules, identified by utilizing crystallography and structure-guided drug design.
We strive to advance our product candidate portfolio from discovery to commercial markets efficiently by utilizing a small group of talented and highly-skilled employees working in conjunction with strategic outsource partners. We are unique in our approach to treat difficult-to-treat rare diseases with orally-administered small molecules and with protein therapeutics, each identified by utilizing crystallography and structure-guided drug design.
Torii’s royalty payment obligations commenced upon the first commercial sale of ORLADEYO in Japan and expire upon the later of (i) the tenth anniversary of the date of first commercial sale of ORLADEYO in Japan, (ii) the expiration of our patents covering ORLADEYO, and (iii) the expiration of regulatory exclusivity for ORLADEYO in Japan.
Torii’s updated royalty payment obligations commenced upon November 30, 2023 and expire upon the later of (i) the tenth anniversary of the date of first commercial sale of ORLADEYO in Japan, (ii) the expiration of our patents covering ORLADEYO, and (iii) the expiration of regulatory exclusivity for ORLADEYO in Japan.
Recombinant C1-INH (Ruconest®) is also available as an acute therapy. 13 Table of Contents • Kallikrein Inhibitors — Kalbitor® (ecallantide) is a specific recombinant plasma kallikrein inhibitor that is dosed subcutaneously by healthcare providers to treat acute HAE attacks.
Recombinant C1-INH (Ruconest®) is also available as an acute therapy. • Kallikrein Inhibitors — Kalbitor® (ecallantide) is a specific recombinant plasma kallikrein inhibitor that is dosed subcutaneously by healthcare providers to treat acute HAE attacks.
Based on proprietary analyses of HAE prevalence and market research studies with HAE patients, physicians, and payors in the United States and Europe, and two full years of commercialization experience with ORLADEYO in the United States in 2021 and 2022, we anticipate the global commercial market for ORLADEYO has the potential to reach a global peak of $1 billion in annual net ORLADEYO revenues.
Based on proprietary analyses of HAE prevalence and market research studies with HAE patients, physicians, and payors in the United States and Europe, and three full years of commercialization experience with ORLADEYO in the United States from 2021 through 2023, we anticipate the global commercial market for ORLADEYO has the potential to reach a global peak of $1 billion in annual net ORLADEYO revenues.
In September 2014, Royalty Sub was unable to pay the full amount of interest payable in September 2013 by the next succeeding payment date for the PhaRMA Notes, which was September 1, 2014. This inability constituted an event of default under the terms of the Indenture.
In September 2014, Royalty Sub was unable to pay the full amount of interest payable in September 2013 by the next succeeding payment date for the PhaRMA Notes, which was September 1, 2014. This inability constituted an event of default under the terms of the Indenture. As of December 31, 2023, the PhaRMA Notes remained in default.
A number of products are currently available in the United States and/or other counties, including Japan, for the prevention or treatment of influenza, including seasonal flu vaccines, F. Hoffmann-La Roche Ltd.’s (“Roche”) TAMIFLU® (oseltamivir), generic oseltamivir, GlaxoSmithKline plc’s (“GSK”) RELENZA®, Genentech and Shiongi’s XOFLUZA® and Daiichi Sankyo Co., Ltd.’s INAVIR®.
A number of products are currently available in the United States and/or other countries, including Japan, for the prevention or treatment of influenza, including seasonal flu vaccines, F. Hoffmann-La Roche Ltd.’s (“Roche”) TAMIFLU® (oseltamivir), generic oseltamivir, GlaxoSmithKline plc’s RELENZA®, Genentech and Shionogi’s XOFLUZA® and Daiichi Sankyo Co., Ltd.’s (“Daiichi”) INAVIR®.
Financial information about revenues derived from countries outside the United States is included in Notes 1 and 2 to the Consolidated Financial Statements contained in this report. Available Information Our website address is www.biocryst.com.
Financial information about revenues derived from countries outside the United States is included in Note 2 to the Consolidated Financial Statements contained in this report. Available Information Our website address is www.biocryst.com.
Failure to submit required information may result in civil monetary penalties for payments, transfers of value, or ownership or investment interests not reported in an annual submission. Compliance with the PPACA and state laws with similar provisions is difficult and time consuming, and companies that do not comply with these state laws face civil penalties.
Failure to submit required information may result in civil monetary penalties for payments, transfers of value, or ownership or investment interests not reported in an annual submission. Compliance with the federal and state laws is difficult and time consuming, and companies that do not comply with these laws can face severe civil penalties.
On February 21, 2023, we announced that recent dose-related observations in an ongoing BCX10013 nonclinical study will delay the clinical program.
On February 21, 2023, we announced that dose-related observations in an ongoing BCX10013 nonclinical study would delay the clinical program.
( “ Shionogi ” ) In February 2007, we entered into a License, Development and Commercialization Agreement (as amended, supplemented or otherwise modified, the “Shionogi Agreement”), an exclusive license agreement with Shionogi to develop and commercialize peramivir in Japan for the treatment of seasonal and potentially life-threatening human influenza.
Peramivir Injection (RAPIVAB, RAPIACTA, PERAMIFLU) Shionogi & Co., Ltd. ( “ Shionogi ” ) In February 2007, we entered into a License, Development and Commercialization Agreement (as amended, supplemented or otherwise modified, the “Shionogi Agreement”), an exclusive license agreement with Shionogi to develop and commercialize peramivir in Japan for the treatment of seasonal and potentially life-threatening human influenza.
By inhibiting plasma kallikrein, ORLADEYO suppresses bradykinin production. Bradykinin is the mediator of acute swelling attacks in HAE patients. ORLADEYO was approved by the U.S. Food and Drug Administration (“FDA”) in December 2020 for prophylaxis to prevent attacks of HAE in adults and pediatric patients 12 years and older.
Bradykinin is the mediator of acute swelling attacks in HAE patients. ORLADEYO was approved by the U.S. Food and Drug Administration (“FDA”) in December 2020 for prophylaxis to prevent attacks of HAE in adults and pediatric patients 12 years and older.
We have licensed a number of compounds protected by certain composition of matter patents from AECOM and IRL, totaling three additional U.S. patents that expire between 2023 and 2029.
We have licensed a number of compounds protected by certain composition of matter patents from AECOM and IRL, totaling two additional U.S. patents that expire between 2024 and 2029.
Additionally, we have approximately 25 Patent Cooperation Treaty or U.S. patent applications pending related to kallikrein inhibitor compounds, neuraminidase inhibitor compounds, BSAV compounds, PNP inhibitor compounds, FOP program compounds, and complement-mediated disease program compounds.
Additionally, we have approximately 28 Patent Cooperation Treaty or U.S. patent applications pending related to kallikrein inhibitor compounds, neuraminidase inhibitor compounds, BSAV compounds, PNP inhibitor compounds, KLK5 program compounds, and complement-mediated disease program compounds.
Further, a clinical trial may only be started after an independent ethics committee has issued a favorable opinion on the CTA in that country. In April 2014, the European Union adopted a new Clinical Trials Regulation (EU) No 536/2014 (the “Regulation”), which is set to replace the current Clinical Trials Directive.
Further, a clinical trial may only be started after an independent ethics committee has issued a favorable opinion on the CTA in that country. In April 2014, the European Union adopted a new Clinical Trials Regulation (EU) No 536/2014 (the “Regulation”), which replaced the Clinical Trials Directive.
In addition, clinical trials are dependent on patient enrollment, but the rate at which patients enroll in a study depends on: • willingness of investigators to participate in a study; • ability of clinical sites to obtain approval from their IRB; • the availability of the required number of eligible subjects to be enrolled in a given trial; • the availability of existing or other experimental drugs for the disease we intend to treat; • the willingness of patients to participate; and • the patients meeting the eligibility criteria.
In addition, clinical trials are dependent on patient enrollment, but the rate at which patients enroll in a study depends on: • willingness of investigators to participate in a study; • ability of clinical sites to obtain approval from their IRB; • the availability of existing or other experimental drugs for the disease we intend to treat; • the willingness of patients to participate; and • the availability of patients meeting the eligibility criteria.
Financial Information For information related to our revenues, profits, net loss and total assets, in addition to other financial information, please refer to the Consolidated Financial Statements and Notes to Consolidated Financial Statements contained in Part II, Item 8 of this report.
The information on our website is not incorporated into this report. Financial Information For information related to our revenues, profits, net loss and total assets, in addition to other financial information, please refer to the Consolidated Financial Statements and Notes to Consolidated Financial Statements contained in Part II, Item 8 of this report.
These include: Company Asset Mechanism of Action Route of Administration Trial Phase Role in Therapy KalVista Sebetralstat Kallikrein inhibitor Oral III Acute treatment Pharvaris PHA121 (PHVS416/PHVS719) B2 receptor antagonist Oral II/III Acute and Prophylaxis Attune ATN-249 Kallikrein inhibitor Oral I Prophylaxis CSL Garadacimab Anti-factor XII mAb IV/Subcutaneous III Prophylaxis Ionis Donidalorsen Prekallikrien Antisense Subcutaneous III Prophylaxis Astria STAR-0215 Kallikrein inhibitor Subcutaneous Ia Prophylaxis ADARx ADX-324 siRNA Subcutaneous I Prophylaxis Intellia NTLA-2002 Gene Therapy IV I/II BioMarin BMN-331 Gene Therapy IV I/II Complement-Mediated Diseases Several rare diseases are known to be mediated by defects of the complement system, including, but not limited to, paroxysmal nocturnal hemoglobinuria (“PNH”), atypical hemolytic uremic syndrome (“aHUS”), complement 3 glomerulopathy (“C3G”), Immunoglobulin A Nephropathy (“IgAN”), and myasthenia gravis.
These include: Company Asset Mechanism of Action Route of Administration Trial Phase Role in Therapy KalVista Sebetralstat Kallikrein inhibitor Oral III Acute Pharvaris PHA121 (PHVS416/PHVS719) B2 receptor antagonist Oral II/III Acute and Prophylaxis Attune ATN-249 Kallikrein inhibitor Oral I/Potentially Inactive CSL Garadacimab Anti-factor XII mAb Subcutaneous Filed Prophylaxis Ionis Donidalorsen Prekallikrien Antisense Subcutaneous III Prophylaxis Astria STAR-0215 Kallikrein inhibitor Subcutaneous Ib/II Prophylaxis ADARx ADX-324 siRNA Subcutaneous I Prophylaxis Intellia NTLA-2002 Gene Editing IV I/II Curative BioMarin BMN-331 Gene Therapy IV I/II Curative Complement-Mediated Diseases Several rare diseases are known to be mediated by defects of the complement system, including, but not limited to, PNH, atypical hemolytic uremic syndrome (“aHUS”), complement 3 glomerulopathy (“C3G”), IgAN, and myasthenia gravis.
The government generally introduces price cut rounds every other year and also mandates price decreases for specific products. New products judged innovative or useful, that are indicated for pediatric use, or that target orphan or small population diseases, 19 Table of Contents however, may be eligible for a pricing premium.
The government generally introduces price cut rounds every other year and also mandates price decreases for specific products. New products judged innovative or useful, that are indicated for pediatric use, or that target orphan or small population diseases, however, may be eligible for a pricing premium. The Japanese government has also promoted the use of generics, where available.
Fast Track Designation Under the Fast Track program, the sponsor of an IND may request the FDA to designate the drug candidate as a Fast Track drug if it is intended to treat a serious condition and fulfill an unmet medical need.
Fast Track Designation Under the Fast Track program, the sponsor of an IND may request the FDA to designate the drug candidate as a Fast Track drug if it is intended to treat a serious or life-threatening condition and data demonstrate its potential to fulfill an unmet medical need.
HAE symptoms include recurrent episodes of edema in various locations, 6 Table of Contents including the hands, feet, face, genitalia and airway. Airway swelling is particularly dangerous and can lead to death by asphyxiation. In addition, patients often have bouts of severe abdominal pain, nausea and vomiting caused by swelling in the intestinal wall.
HAE symptoms include recurrent episodes of edema in various locations, including the hands, feet, face, genitalia and airway. Airway swelling is particularly dangerous and can lead to death by asphyxiation. In addition, patients often have bouts of severe abdominal pain, nausea and vomiting caused by swelling in the intestinal wall. By inhibiting plasma kallikrein, ORLADEYO suppresses bradykinin production.
Government, including the procurement contract with HHS for up to 50,000 doses of RAPIVAB over a five-year period to supply the Strategic National Stockpile for use in a public health emergency and contracts with NIAID/HHS and BARDA/HHS for the development of galidesivir, as more fully discussed above under “Products and Product Candidates” and in “Note 15—Collaborative and Other Relationships” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this report.
Government, including the procurement contract with HHS for up to 50,000 doses of RAPIVAB over a five-year period to supply the Strategic National Stockpile for use in a public health emergency and contracts with the National Institute of Allergy and Infectious Diseases within the HHS (“NIAID/HHS”) and BARDA/HHS for the development of galidesivir, as more fully discussed in “Note 15—Collaborative and Other Relationships” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this report.
While clinical trial data and information governed by HIPAA are currently exempt from 21 Table of Contents the CCPA, other personal information may be covered, and possible changes to the CCPA may broaden its scope. Other states, such as Virginia, Colorado and Utah, have also enacted comprehensive privacy laws, and it is possible that additional states will follow suit.
While clinical trial data and information governed by HIPAA are currently exempt from the CCPA, other personal data may be covered. Several other states, such as Virginia, Colorado and Utah, have also enacted comprehensive privacy laws, and it is possible that additional states will follow suit.
The GDPR also imposes additional special protections for “special category data,” which includes health, biometric and genetic information of data subjects located in the EEA and, through incorporation in national legislation, the United Kingdom.
The GDPR also imposes additional special protections for “special category data,” which includes health, biometric and genetic information of data subjects located in the EEA.
Among the other benefits of orphan drug designation are tax credits for certain research and a waiver of the NDA application user fee for the orphan indication.
Among the other benefits of orphan drug designation are tax credits for certain research and a waiver of the NDA application user fee for the orphan indication. The FDA’s interpretation of the scope of orphan drug exclusivity may change.
While this e-Privacy Regulation was originally intended to be adopted on May 25, 2018, it is still going through the European legislative process and the timing of its adoption remains unclear.
While this e-Privacy Regulation was originally intended to be adopted on May 25, 2018, it is still going through the European legislative process and the timing of its adoption remains unclear. Anti-Corruption Laws We are also subject to the U.S.
As of December 31, 2022, we have been issued approximately 31 U.S. patents that expire between 2023 and 2039 and that relate to our kallikrein inhibitor compounds, neuraminidase inhibitor compounds, broad-spectrum antiviral (“BSAV”) compounds, purine nucleoside phosphorylase (“PNP”) inhibitor compounds, and complement-mediated disease 12 Table of Contents program compounds.
As of December 31, 2023, we have been issued approximately 39 U.S. patents that expire between 2027 and 2039 and that relate to our kallikrein inhibitor compounds, neuraminidase inhibitor compounds, broad-spectrum antiviral (“BSAV”) compounds, PNP inhibitor compounds, and complement-mediated disease program compounds.
Department of Health and Human Services (“HHS”) awarded us a $34.7 million contract for the procurement of up to 50,000 doses of RAPIVAB over a five-year period to supply the Strategic National Stockpile for use in a public health emergency.
Department of Health and Human Services (“HHS”) awarded us a $34.7 million contract for the procurement of up to 50,000 doses of RAPIVAB over a five-year period to supply the Strategic National Stockpile for use in a public health emergency. We initially delivered 20,000 doses of RAPIVAB under this contract in 2019 for a total price of approximately $13.9 million.
Pursuant to the Clinical Trials Directive 2001/20/EC, as amended (the “Clinical Trials Directive”), a system for the approval of clinical trials in the European Union has been implemented through national legislation of the member states.
European Union The various phases of preclinical and clinical research in the European Union are subject to significant regulatory controls. Pursuant to the Clinical Trials Directive 2001/20/EC, as amended (the “Clinical Trials Directive”), a system for the approval of clinical trials in the European Union has been implemented through national legislation of the member states.
We initially delivered 20,000 doses of RAPIVAB under this contract in 9 Table of Contents 2019 for a total price of approximately $13.9 million. We further delivered 20,000 and 9,980 doses of RAPIVAB in 2022 and 2021, respectively, and recorded revenue of $13.9 million and $6.9 million for the years ending December 31, 2022 and December 31, 2021, respectively.
We further delivered 20,000 and 9,980 doses of RAPIVAB in 2022 10 Table of Contents and 2021, respectively, and recorded revenue of $13.9 million and $6.9 million for the years ending December 31, 2022 and 2021, respectively.
By focusing on rare disease markets, we believe that we can more effectively control the costs of, and our strategic allocation of financial resources toward, post-approval commercialization. We select disease targets and product candidates in which a small molecule would offer a significant benefit over existing products or would be the first to market.
By focusing on rare disease markets, we believe that we can more effectively control the costs of, and our strategic allocation of financial resources toward, post-approval commercialization. We select disease targets and product candidates in which an oral small molecule or protein therapeutic has the potential to be best-in-class or would be the first to market.
Phase 3 (pivotal) — If a compound is found to be potentially effective and to have an acceptable safety profile in phase 2 evaluations, phase 3 clinical trials, also called pivotal studies, major studies, or advanced clinical trials, are undertaken to further demonstrate clinical efficacy and to further test for safety within an expanded patient population at 16 Table of Contents geographically dispersed clinical trial sites.
Phase 3 — If a compound is found to be potentially effective and to have an acceptable safety profile in phase 2 evaluations, phase 3 clinical trials, also sometimes called pivotal studies, major studies, or advanced clinical trials, are typically undertaken to further demonstrate clinical efficacy and to further test for safety within an expanded patient population at geographically dispersed clinical trial sites. 17 Table of Contents Initiation and completion of the clinical trial phases are dependent upon many factors, including things that are beyond our control.
For example, the FDA may require post-marketing 17 Table of Contents testing, including phase 4 clinical trials, and surveillance programs to further assess and monitor the product’s safety and effectiveness after commercialization.
The FDA may impose a number of post-approval requirements as a condition of approval of an NDA. For example, the FDA may require post-marketing testing, including phase 4 clinical trials, and surveillance programs to further assess and monitor the product’s safety and effectiveness after commercialization.
The decentralized procedure provides for mutual recognition of national approval decisions, and the holder of a national marketing authorization may submit an application to the remaining member states.
The decentralized procedure provides for mutual recognition of national approval decisions, and the holder of a national marketing authorization may submit an application to the remaining member states. The decentralized procedure is only available for pharmaceutical products not falling within the mandatory scope of the centralized procedure.
See “Risk Factors—Risks Relating to Our Business—Risks Relating to Drug Development and Commercialization—There can be no assurance that our or our partners’ commercialization efforts, methods, and strategies for our products or technologies will succeed, and our future revenue generation is uncertain” in Part I, Item 1A of this report for further discussion of these risks.
See “Risk Factors—Risks Relating to Our Business—Risks Relating to Drug Development and Commercialization—There can be no assurance that our or our partners’ commercialization efforts, methods, and strategies for our products or technologies will succeed, and our future revenue generation is uncertain” in Part I, Item 1A of this report for further discussion of these risks. 8 Table of Contents Complement-Mediated Diseases The goal of our overall complement program is to advance several first-in-class and/or best-in-class compounds across multiple pathways in the complement system to treat many complement-mediated diseases.
In particular, the claims in all promotional materials and activities must be consistent with the FDA approvals for approved products and must be appropriately substantiated and fairly balanced with information on the safety risks and limitations of the products. We are also required to engage in appropriate truthful, non-misleading, and non-promotional scientific exchange concerning our products.
In particular, the claims in all promotional materials and activities must be consistent with the FDA approvals for approved products and must be appropriately substantiated and fairly balanced with information on the safety risks and limitations of the products.
As of December 31, 2022, we have delivered a total of 49,980 RAPIVAB doses of the 50,000 RAPIVAB doses available under the contract, effectively completing the contract with HHS.
As of December 31, 2022, we had delivered a total of 49,980 RAPIVAB doses of the 50,000 RAPIVAB doses available under the contract, effectively completing the contract with HHS. Collaborations and In-License Relationships ORLADEYO Torii Pharmaceutical Co., Ltd.
The alternative pathway also provides a critical amplification loop for all three pathways, regardless of the initiating mechanism. Factor D is an essential enzyme in the alternative pathway, thus making Factor D an attractive target to address complement-mediated diseases. Several rare diseases are known to be mediated by dysregulation of the complement system.
The alternative pathway also provides a critical amplification loop for all three pathways, regardless of the initiating mechanism. Several rare diseases are known to be mediated by dysregulation of the complement system. BCX10013 BCX10013 is a potential once-daily, oral Factor D inhibitor, which targets the alternative pathway of complement.
On January 23, 2023, we announced that we have entered into a collaboration with Swixx to commercialize ORLADEYO in CEE. Under the terms of the agreement, Swixx will be responsible for commercializing ORLADEYO in 15 markets within CEE. 10 Table of Contents Peramivir Injection (RAPIVAB, RAPIACTA, PERAMIFLU) Shionogi & Co., Ltd.
On January 23, 2023, we announced that we have entered into a collaboration with Swixx to commercialize ORLADEYO in CEE. Under the terms of the agreement, Swixx will be responsible for commercializing ORLADEYO in 15 markets within CEE. On July 19, 2023, we announced that we have entered into a collaboration with Er-Kim Pharmaceuticals to commercialize ORLADEYO in Turkey.
Business Strategy Our business strategy is twofold: to serve patients and to create stockholder value both by focusing our discovery and development efforts on oral drugs for rare diseases for which a significant unmet medical need exists and by efficiently commercializing these drugs in the United States and certain other regions upon regulatory approval.
Business Strategy Our business strategy is twofold: to serve patients and to create stockholder value both by focusing our discovery and development efforts on potential first-in-class or best-in-class oral small-molecule and protein therapeutics to target difficult-to-treat rare diseases and by efficiently commercializing these drugs in the United States and certain other regions upon regulatory approval.
The process for obtaining coverage can be lengthy and costly, and it could take several months before a particular payor initially reviews a product and makes a decision with respect to coverage.
The process for obtaining coverage can be lengthy and costly, and it could take several months before a particular payor initially reviews a product and makes a decision with respect to coverage. For example, third-party payors may require cost-benefit analysis data in order to demonstrate the cost-effectiveness of a particular product.
We received an additional milestone payment of $15.0 million in the second quarter of 2021 upon receipt from the Japanese National Health Insurance System (“NHI”) of a reimbursement price approval for ORLADEYO.
We received an additional milestone payment of $15.0 million in the second quarter of 2021 upon receipt from the Japanese National Health Insurance System (“NHI”) of a reimbursement price approval for ORLADEYO. On November 30, 2023, we entered into an Amended and Restated Commercialization and License Agreement with Torii (as amended, the “Torii Agreement”).
Anti-kickback laws generally prohibit a manufacturer from soliciting, offering, receiving, or paying any remuneration to generate business, including the purchase or prescription of a particular drug. Although the specific provisions of these laws vary, their scope is generally broad and there may be no regulations, guidance or court decisions that clarify how the laws apply to particular industry practices.
Although the specific provisions of these laws vary, their scope is generally broad and there may be no regulations, guidance or court decisions that clarify how the laws apply to particular industry practices.
Alexion’s (part of AstraZeneca Rare Disease) Soliris® (eculizumab) is a C5 inhibitor approved for PNH, aHUS, myasthenia gravis, and neuromyelitis optica spectrum disorder. Soliris had global sales of over $3.7 billion in 2022. Alexion also received FDA approval for Ultomiris® (ravulizumab), a longer-acting C5 inhibitor, as a treatment for PNH in late 2018 and aHUS in late 2019.
Alexion’s (part of AstraZeneca Rare Disease) Soliris® (eculizumab) is a C5 inhibitor approved for PNH, aHUS, myasthenia gravis, and neuromyelitis optica spectrum disorder. Soliris had global sales of over $3.1 billion in 2023.
Under the Torii Agreement, we are entitled to receive tiered royalty payments, ranging from 20% to 40% of annual net sales of ORLADEYO in Japan during each calendar year.
Under the Torii Agreement, we are entitled to receive tiered royalty payments, ranging from 20% to 80% of annual net sales of ORLADEYO in Japan during each calendar year. We are now responsible for all commercial promotion activities to support ORLADEYO sales in Japan, and Torii will be responsible for HAE disease awareness activities in Japan.
Research and Development We initiated our research and development activities in 1986. We have assembled a scientific research staff with expertise in a broad base of advanced research technologies, including protein biochemistry, X-ray crystallography, chemistry, and pharmacology.
In particular, Rezolute Inc.’s oral plasma kallikrein inhibitor RZ-402 is currently in phase II for diabetic macular edema. Research and Development We initiated our research and development activities in 1986. We have assembled a scientific research staff with expertise in a broad base of advanced research technologies, including protein biochemistry, X-ray crystallography, chemistry, and pharmacology.
There can be no assurance that our commercialization methods and strategies will succeed, or that the market for ORLADEYO will develop in line with our current expectations.
These expectations are subject to numerous risks and uncertainties that may cause our actual results, performance, or achievements to be materially different. There can be no assurance that our commercialization methods and strategies will succeed, or that the market for ORLADEYO will develop in line with our current expectations.
It is approved in Japan for the treatment of adults, children, and infants with uncomplicated seasonal influenza and those patients at high-risk for complications associated with influenza.
In January 2010, our partner, Shionogi, received the first approval for peramivir injection and launched it in Japan under the commercial name RAPIACTA. It is approved in Japan for the treatment of adults, children, and infants with uncomplicated seasonal influenza and those patients at high-risk for complications associated with influenza.
For example, third-party payors may require cost-benefit analysis data in order to demonstrate the cost-effectiveness of a particular product. 20 Table of Contents Outside the United States, ensuring adequate coverage and payment for drug products can have challenges. Pricing of prescription pharmaceuticals is subject to governmental control in many countries.
Outside the United States, ensuring adequate coverage and payment for drug products can have challenges. Pricing of prescription pharmaceuticals is subject to governmental control in many countries.
The requirements governing the conduct of clinical trials, product licensing, pricing, and reimbursement vary greatly from country to country, some of which are discussed below, and may also include post-approval commitments. 18 Table of Contents European Union The various phases of preclinical and clinical research in the European Union are subject to significant regulatory controls.
In most of the Asian markets, registration timelines depend on marketing approval in the United States or the European Union. The requirements governing the conduct of clinical trials, product licensing, pricing, and reimbursement vary greatly from country to country, some of which are discussed below, and may also include post-approval commitments.
Our corporate headquarters is located at 4505 Emperor Blvd., Suite 200, Durham, North Carolina 27703, and our corporate telephone number is (919) 859-1302. For more information about us, please visit our website at www.biocryst.com. The information on our website is not incorporated into this report.
We consider our relations with our employees to be satisfactory. Corporate Information We are a Delaware corporation originally founded in 1986. Our corporate headquarters is located at 4505 Emperor Blvd., Suite 200, Durham, North Carolina 27703, and our corporate telephone number is (919) 859-1302. For more information about us, please visit our website at www.biocryst.com.
Compliance with these electronic pedigree requirements may increase our operational expenses and impose significant administrative burdens. Data Privacy and Security Laws Pharmaceutical companies may be subject to U.S. federal and state health information privacy, security, and data breach notification laws, which may govern the collection, use, disclosure, and protection of health-related and other personal information.
Data Privacy and Security Laws Pharmaceutical companies may be subject to U.S. federal and state health information privacy, security, data breach notification, and consumer protection laws (e.g., Section 5 of the Federal Trade Commission Act) which may govern the collection, use, disclosure, and protection of health-related and other personal data.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur failure to comply with existing or future regulatory requirements for regulatory approval, or our loss of, or changes to, previously obtained approvals, could impair our ability to generate any revenues from product sales or licensing arrangements, which could have a material adverse effect on our business, financial condition, and results of operations. 29 Table of Contents We focus on rare diseases, which may create additional risks and challenges.
Biggest changeEven upon any approval to market our potential products, whether in the United States or internationally, we will continue to be subject to extensive regulatory requirements, as discussed under “Risk Factors—Risks Relating to Our Business—Legal and Regulatory Risks—We are 32 Table of Contents subject to various laws and regulations related to our products and product candidates, and if we or our partners do not comply with these laws and regulations, we could face substantial penalties.” Our failure to comply with existing or future regulatory requirements for regulatory approval, or our loss of, or changes to, previously obtained approvals, could impair our ability to generate any revenues from product sales or licensing arrangements, which could have a material adverse effect on our business, financial condition, and results of operations.
As discussed under “Risk Factors—Risks Relating to Our Business—Risks Relating to Drug Development and Commercialization—Our success depends upon our ability to manage our product candidate pipeline, advance our product candidates through the various stages of development, especially through the clinical trial process, and to receive regulatory approvals for the commercial sale of our product candidates,” we or our partners have experienced, and may again in the future experience, any number of unfavorable outcomes during or as a result of preclinical studies and clinical trials that could delay or prevent regulatory approval of our product candidates, or negatively impact our management’s credibility, our value and our operating results.
As discussed under “Risk Factors—Risks Relating to Our Business—Risks Relating to Drug Development and Commercialization—Our success depends upon our ability to manage our product candidate pipeline, advance our product candidates through the various stages of development, especially through the clinical trial process, and to receive regulatory approvals for the commercial sale of our product candidates,” we and our partners have experienced, and may again in the future experience, any number of unfavorable outcomes during or as a result of preclinical studies and clinical trials that could delay or prevent regulatory approval of our product candidates, or negatively impact our management’s credibility, our value and our operating results.
The commercial viability of any approved product could be compromised if the product is less effective than expected, causes undesirable side effects that either were not previously identified or worse than expected, or fails to achieve market acceptance within the medical community.
The commercial viability of any approved product could be compromised if the product is less effective than expected, causes undesirable side effects that either were not previously identified or were worse than expected, or fails to achieve market acceptance within the medical community.
If, after obtaining regulatory approval of a product, we or others discover that the product is less effective than previously believed or causes undesirable side effects that either were not previously identified or worse than expected, any of the following adverse events could occur: • regulatory authorities may withdraw their approval of, or impose marketing or manufacturing restrictions on, the product, or require us or our partners to create a medication guide outlining the risks of unidentified side effects for distribution to patients; • we or our partners may be required to recall the product, change the way the product is administered, conduct additional clinical trials, or be subject to civil or criminal penalties; and • the product may become less competitive and our reputation may suffer.
If, after obtaining regulatory approval of a product, we or others discover that the product is less effective than previously believed or causes undesirable side effects that either were not previously identified or were worse than expected, any of the following adverse events could occur: • regulatory authorities may withdraw their approval of, or impose marketing or manufacturing restrictions on, the product, or require us or our partners to create a medication guide outlining the risks of unidentified side effects for distribution to patients; • we or our partners may be required to recall the product, change the way the product is administered, conduct additional clinical trials, or be subject to civil or criminal penalties; and • the product may become less competitive and our reputation may suffer.
However, we cannot assure you that this will be the case or that we will not otherwise be adversely affected as a result the continuing events of default under the PhaRMA Notes or the failure by Royalty Sub to repay the PhaRMA Notes at maturity.
However, we cannot assure you that this will be the case or that we will not otherwise be adversely affected as a result of the continuing events of default under the PhaRMA Notes or the failure by Royalty Sub to repay the PhaRMA Notes at maturity.
Our third-party vendors, particularly our third-party manufacturers and distributors, each of which may be the only vendor we have engaged for a particular product, product candidate, or service or in a particular region, may encounter difficulties with meeting our requirements, including, but not limited to, problems involving, as applicable: • insufficient resources being devoted in the manner necessary to satisfy our requirements within expected timeframes; • inconsistent production yields; • product liability claims or recalls of commercial product; • difficulties in scaling production to commercial and validation sizes; • interruption of the delivery of materials required for the manufacturing process; • failure to distribute commercial supplies of our products to commercial vendors or end users in a timely manner; • scheduling of plant time with other vendors or unexpected equipment failure; • potential catastrophes that could strike their facilities or have an effect on infrastructure; • potential impurities in our drug substance or products that could affect availability of product for our clinical trials or future commercialization; • poor quality control and assurance or inadequate process controls; • failure to provide us with accurate or timely information regarding inventories, the number of patients who are using our products, or serious adverse events and/or product complaints regarding our products; • inability of third parties to satisfy their financial obligations to us or to others; • potential breach of the manufacturing or distribution agreement by the third party; • possible termination or nonrenewal of a critical agreement by the third party at a time that is costly or inconvenient to us; and • lack of compliance or cooperation with regulations and specifications or requests set forth by the FDA or other foreign regulatory agencies or local customs, particularly associated with ORLADEYO, BCX10013, peramivir and our early-stage compounds.
Our third-party vendors, particularly our third-party manufacturers and distributors, each of which may be the only vendor we have engaged for a particular product, product candidate, or service or in a particular region, may encounter difficulties with meeting our requirements, including, but not limited to, problems involving, as applicable: • insufficient resources being devoted in the manner necessary to satisfy our requirements within expected timeframes; • inconsistent production yields; • product liability claims or recalls of commercial product; • difficulties in scaling production to commercial and validation sizes; • interruption of the delivery of materials required for the manufacturing process; • failure to distribute commercial supplies of our products to commercial vendors or end users in a timely manner; • scheduling of plant time with other vendors or unexpected equipment failure; • potential catastrophes that could strike their facilities or have an effect on infrastructure; • potential impurities in our drug substance or products that could affect availability of product for our clinical trials or future commercialization; 36 Table of Contents • poor quality control and assurance or inadequate process controls; • failure to provide us with accurate or timely information regarding inventories, the number of patients who are using our products, or serious adverse events and/or product complaints regarding our products; • inability of third parties to satisfy their financial obligations to us or to others; • potential breach of the manufacturing or distribution agreement by the third party; • possible termination or nonrenewal of a critical agreement by the third party at a time that is costly or inconvenient to us; and • lack of compliance or cooperation with regulations and specifications or requests set forth by the FDA or other foreign regulatory agencies or local customs, particularly associated with ORLADEYO, BCX10013, peramivir and our early-stage compounds.
The process of establishing and implementing collaborative relationships is difficult, time-consuming and involves significant uncertainty, including: • we or our partners may seek to renegotiate or terminate our relationships due to unsatisfactory commercial, regulatory or clinical results, including post-approval clinical commitments, a change in business strategy, a change of control or other reasons; • our contracts for collaborative arrangements may expire; • the possibility that expiration or termination of collaborative relationships, such as those with certain of our distribution partners, may trigger repurchase obligations of the Company for unsold product held by our partners; • our partners may choose to pursue alternative technologies, including those of our competitors; • we have had in the past, and in the future may have, disputes with a partner that could lead to litigation or arbitration, which could result in substantial costs and divert the attention of our management; • we do not have day-to-day control over the activities of our partners and have limited control over their decisions; • our ability to generate future event payments and royalties from our partners depends upon their abilities to establish the safety and efficacy of our product candidates, obtain regulatory approvals and achieve market acceptance of products developed from our product candidates; • we or our partners may fail to properly initiate, maintain or defend our intellectual property rights, where applicable, or a party may utilize our proprietary information in such a way as to invite litigation that could jeopardize or potentially invalidate our proprietary information or expose us to potential liability; • we or our partners may not devote sufficient capital or resources toward our products and product candidates; and • we or our partners may not comply with applicable government regulatory requirements.
The process of establishing and implementing collaborative relationships is difficult, time-consuming and involves significant uncertainty, including: • we or our partners may seek to renegotiate or terminate our relationships due to unsatisfactory commercial, regulatory or clinical results, including post-approval clinical commitments, a change in business strategy, a change of control or other reasons; • our contracts for collaborative arrangements may expire; • the possibility that expiration or termination of collaborative relationships, such as those with certain of our distribution partners, may trigger repurchase obligations of the Company for unsold product held by our partners; • our partners may choose to pursue alternative technologies, including those of our competitors; 34 Table of Contents • we have had in the past, and in the future may have, disputes with a partner that could lead to litigation or arbitration, which could result in substantial costs and divert the attention of our management; • we do not have day-to-day control over the activities of our partners and have limited control over their decisions; • our ability to generate future event payments and royalties from our partners depends upon their abilities to establish the safety and efficacy of our product candidates, obtain regulatory approvals and achieve market acceptance of products developed from our product candidates; • we or our partners may fail to properly initiate, maintain or defend our intellectual property rights, where applicable, or a party may utilize our proprietary information in such a way as to invite litigation that could jeopardize or potentially invalidate our proprietary information or expose us to potential liability; • we or our partners may not devote sufficient capital or resources toward our products and product candidates; and • we or our partners may not comply with applicable government regulatory requirements.
If we are unable to raise capital as and when needed, we may need to adjust our operations” in this section and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” in Part II, Item 7 of this report for additional information about our liquidity risks and capital requirements.
If we are unable to raise capital if and when needed, we may need to adjust our operations” in this section and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” in Part II, Item 7 of this report for additional information about our liquidity risks and capital requirements.
In addition, the research, manufacturing, distribution, sale and promotion of products are potentially subject to regulation by various federal, state and local authorities in addition to the FDA, including the Centers for Medicare and Medicaid Services, other divisions of the HHS, the DOJ and individual U.S.
In addition, the research, manufacturing, distribution, sale and promotion of products are potentially subject to regulation by various federal, state and local authorities in addition to the FDA, including the Centers for Medicare and Medicaid Services (“CMS”), other divisions of HHS, the DOJ and individual U.S.
For example, the GDPR requires us to make more detailed disclosures to data subjects, requires disclosure of the legal basis on which we can process personal data, makes it harder for us to obtain valid consent for processing, requires the appointment of a data protection officer where sensitive personal data (i.e., health data) is processed on a large scale, introduces mandatory data breach notification throughout the European Union, imposes additional obligations on us when we are contracting with service providers and requires us to adopt appropriate privacy governance including policies, procedures, training and data audit.
For example, the GDPR requires us to make more detailed disclosures to data subjects, requires disclosure of the legal basis on which we can process personal data, makes it harder for us to obtain valid consent for processing, requires the appointment of a data protection officer where sensitive personal data (i.e., health data) is processed on a large scale, introduces mandatory data breach notification throughout the European Union, imposes additional obligations on us when we are contracting with service providers and requires us to adopt appropriate privacy governance including policies, procedures, training and data audits.
Any compromise of our data security could also result in a violation of applicable privacy and other laws, significant legal and financial exposure, damage to our reputation, loss or misuse of the information and a loss of confidence in our data security measures, which could harm our business.
Any compromise of our data security could also result in a violation of applicable privacy and other laws, significant legal, regulatory, and financial exposure, damage to our reputation, loss or misuse of the information and a loss of confidence in our data security measures, which could harm our business.
If we are unable to obtain sufficient additional capital as and when needed, we may be forced to adjust or curtail our operations; delay, reduce, or stop ongoing clinical trials or commercialization efforts; cease operations altogether; or file for bankruptcy.
If we are unable to obtain sufficient additional capital if and when needed, we may be forced to adjust or curtail our operations; delay, reduce, or stop ongoing clinical trials or commercialization efforts; cease operations altogether; or file for bankruptcy.
These events may cause businesses and government agencies to be shut down, supply chains to be interrupted, slowed, or rendered inoperable, and individuals to become ill, quarantined, or otherwise unable to work and/or travel due to health reasons or governmental restrictions.
These events may cause businesses and government agencies to be shut down, supply chains or trade to be interrupted, slowed, or rendered inoperable, and individuals to become ill, quarantined, or otherwise unable to work and/or travel due to health reasons or governmental restrictions.
We rely heavily upon third parties for many important stages of our product candidate development, including, but not limited to: • discovery of natural proteins that cause or enable biological reactions necessary for the progression of the disease or disorder, called enzyme targets; • execution of certain pharmacology preclinical studies and late-stage development for our compounds and product candidates; • management of our phase 1, 2 and 3 clinical trials, including medical monitoring, laboratory testing, and data management; • execution of toxicology studies that may be required to obtain approval for our product candidates; • formulation improvement strategies and methods; • manufacturing the starting materials and drug substance required to formulate our products and the product candidates to be used in our clinical trials, toxicology studies and any potential commercial product; and • management of certain regulatory interactions outside of the United States.
We rely heavily upon third parties for many important stages of our product candidate development, including, but not limited to: • discovery of natural proteins that cause or enable biological reactions necessary for the progression of the disease or disorder; • execution of certain pharmacology preclinical studies and late-stage development for our compounds and product candidates; • management of our phase 1, 2 and 3 clinical trials, including medical monitoring, laboratory testing, and data management; • execution of toxicology studies that may be required to obtain approval for our product candidates; • formulation improvement strategies and methods; • manufacturing the starting materials and drug substance required to formulate our products and the product candidates to be used in our clinical trials, toxicology studies and any potential commercial product; and • management of certain regulatory interactions outside of the United States.
We have expanded, and may continue expanding, our development and regulatory capabilities and implementing sales, marketing and distribution capabilities, and as a result, we may encounter difficulties in managing our growth, which could disrupt our operations.
We have expanded, and may continue expanding, our development and regulatory capabilities and are implementing sales, marketing and distribution capabilities, and as a result, we may encounter difficulties in managing our growth, which could disrupt our operations.
Our ability to complete the clinical development process successfully is dependent upon many factors, including, but not limited to: • our or our partners’ ability to secure suitable clinical sites and investigators and to enroll and maintain an adequate number of patients on a timely basis or at all; • patients that enroll in a clinical trial may not comply with the clinical trial protocol or maintain contact with investigators to provide complete data during and after treatment; • our product candidates may not prove to be either safe or effective or may produce unfavorable or inconclusive results; • we or our partners may decide, or be required by regulatory authorities, to pause enrollment in, suspend or terminate clinical research for various reasons, including a finding that the participants are being exposed to unacceptable health risks, undesirable side effects or other unexpected characteristics of the product candidate, noncompliance with regulatory requirements or their standards of conduct, or findings of undesirable effects caused by a chemically or mechanistically similar product or product candidate; • regulatory authorities may disagree with our or our partners’ clinical trial protocols or our or their interpretation of data from preclinical studies and clinical trials; • clinical protocols or study procedures may not be adequately designed or followed by the investigators; • formulation improvements may not work as expected, which could negatively impact commercial demand for our product candidates; • regulatory authorities may fail to approve or subsequently find fault with the manufacturing processes or facilities of third-party manufacturers with which we or our partners enter into agreements for clinical and commercial supplies; • the supply or quantity of raw materials or manufactured product candidates or other materials necessary to conduct development activities may be insufficient, inadequate, or unavailable at an acceptable cost, and we or our partners may experience interruptions in supply; • our or our partners’ development plans may be delayed or changed as a result of changes in development strategy, the impact of new or different regulations, requirements, and guidelines, or other unexpected events or conditions; • the cost of preclinical studies and clinical trials may be greater than we anticipate; • we or our third-party contractors, including those manufacturing our product candidates or components or ingredients thereof, or conducting clinical trials or laboratory testing on our or our partners’ behalf, may fail to comply with regulatory requirements and industry standards or meet contractual obligations in a timely manner or at all; and • the impact of the ongoing COVID-19 pandemic on one or more of the foregoing factors.
Our ability to complete the clinical development process successfully is dependent upon many factors, including, but not limited to: • our or our partners’ ability to secure suitable clinical sites and investigators and to enroll and maintain an adequate number of patients on a timely basis or at all; • patients that enroll in a clinical trial may not comply with the clinical trial protocols or maintain contact with investigators to provide complete data during and after treatment; • our product candidates may not prove to be either safe or effective for our targeted indications, or at all, or may produce unfavorable or inconclusive results; • we or our partners may decide, or be required by regulatory authorities, to pause enrollment in, suspend, or terminate clinical research for various reasons, including a finding that the participants are being exposed to unacceptable health risks, undesirable side effects or other unexpected characteristics of the product candidate, noncompliance with regulatory requirements or their standards of conduct, or findings of undesirable effects caused by a chemically or mechanistically similar product or product candidate; • regulatory authorities may disagree with our or our partners’ clinical trial protocols or our or their interpretation of data from preclinical studies and clinical trials; • clinical protocols or study procedures may not be adequately designed or followed by the investigators; • formulation improvements may not work as expected, which could negatively impact commercial demand for our product candidates; • regulatory authorities may fail to approve or subsequently find fault with the manufacturing processes or facilities of third-party manufacturers with which we or our partners enter into agreements for clinical and commercial supplies; • the supply or quantity of raw materials or manufactured product candidates or other materials necessary to conduct development activities may be insufficient, inadequate, or unavailable at an acceptable cost, and we or our partners may experience interruptions in supply; • our or our partners’ development plans may be delayed or changed as a result of changes in development strategy, the impact of new or different regulations, requirements, and guidelines, or other unexpected events or conditions; • the cost of preclinical studies and clinical trials may be greater than we anticipate; • we or our third-party contractors, including those manufacturing our product candidates or components or ingredients thereof, or conducting clinical trials or laboratory testing on our or our partners’ behalf, may fail to comply with regulatory requirements and industry standards or meet contractual obligations in a timely manner or at all; and • the impact of any global health pandemic, such as COVID-19, on one or more of the foregoing factors.
If we are unable to maintain current third-party relationships, or enter into new agreements with additional third parties on commercially reasonable terms, or if there is poor manufacturing or distribution performance or failure to comply with any regulatory agency on the part of any of our third-party vendors, we may not be able to complete development of, obtain timely approval of, or commercialize our products and product candidates.
If we are unable to maintain current third-party relationships, or enter into new agreements with additional third parties on commercially reasonable terms, or at all, or if there is poor manufacturing or distribution performance or failure to comply with any regulatory agency on the part of any of our third-party vendors, we may not be able to complete development of, obtain timely approval of, or commercialize our products and product candidates.
Our Amended and Restated Bylaws provide that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for certain litigation that may be initiated by our stockholders, which may limit a stockholder’s ability to obtain a favorable judicial forum for such disputes with us or our directors, officers or employees.
Our Amended and Restated By-Laws provide that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for certain litigation that may be initiated by our stockholders, which may limit a stockholder’s ability to obtain a favorable judicial forum for such disputes with us or our directors, officers or employees.
Identifying, selecting, and in-licensing or acquiring products or product candidates requires substantial expense and technical and financial expertise, and if we are unable to effectively manage our pipeline and integrate viable products or product candidates into our business on acceptable terms, or at all, our business and drug development efforts would suffer.
Identifying, selecting, and in-licensing or acquiring products or product candidates requires substantial expense and technical and financial expertise, and if we are unable to effectively manage our pipeline or integrate viable products or product candidates into our business on acceptable terms, or at all, our business and drug development efforts could suffer.
In addition, future revenue from sales of ORLADEYO is subject to uncertainties and will depend on several factors, including the success of our and our partners’ commercialization efforts in the United States and elsewhere, the number of new patients switching to ORLADEYO, patient retention and demand, the number of physicians prescribing ORLADEYO, the rate of monthly prescriptions, reimbursement from third-party and government payors, the conversion of patients from our clinical trials and early access programs to commercial customers, our pricing strategy, and market trends.
In addition, future revenue from sales of ORLADEYO is subject to uncertainties and will depend on several factors, including the success of our and our partners’ commercialization efforts in the United States and elsewhere, the number of new patients switching to ORLADEYO, patient retention and demand, the number of physicians prescribing ORLADEYO, the rate of monthly prescriptions, reimbursement from third-party and government payors, the number of patients receiving free product, the conversion of patients from our clinical trials and early access programs to commercial customers, our pricing strategy, and market trends.
Our top ten stockholders own approximately 50% of our common stock and can individually, and as a group, influence our operations based upon their concentrated ownership and may also be able to influence the outcome of matters requiring approval of the stockholders, including the election of our directors and other corporate actions.
Our top ten stockholders own approximately 45% of our common stock and can individually, and as a group, influence our operations based upon their concentrated ownership and may also be able to influence the outcome of matters requiring approval of the stockholders, including the election of our directors and other corporate actions.
In addition, commercialization of our products is subject to further risks and may be negatively impacted by a number of factors, including, but not limited to, the following: • our products may not prove to be adequately safe and effective for market approval in markets other than the markets in which they are currently approved; • necessary funding for post-marketing commitments and further development of our products may not be available timely, at all, or in sufficient amounts; • advances in competing products could substantially replace potential demand for our products; • government and third-party payors may not provide sufficient coverage or reimbursement, which would negatively impact the demand for our products; • we may not be able to supply commercial material to our partners and our partners may not be able to maintain or establish sufficient and acceptable commercial manufacturing, either directly or through third-party manufacturers; • the commercial demand and acceptance for our products by healthcare providers and by patients may not be sufficient to result in substantial product revenues to us or to our partners and may result in little to no revenue, milestone payments, or royalties to us; • effectiveness of marketing and commercialization efforts for our products by us or our partners; • market satisfaction with existing alternative therapies; • perceived efficacy relative to other available therapies; • disease prevalence; • cost of treatment; • our pricing and reimbursement strategy may not be effective; • pricing and availability of imports or alternative products; • marketing and sales activities of competitors; • shifts in the medical community to new treatment paradigms or standards of care; and • relative convenience and ease of administration.
In addition, commercialization of our products is subject to further risks and may be negatively impacted by a number of factors, including, but not limited to, the following: • our products may not prove to be adequately safe and effective for market approval in markets other than the markets in which they are currently approved; • necessary funding for post-marketing commitments and further development of our products may not be available timely, at all, or in sufficient amounts; • advances in competing products could substantially replace potential demand for our products; • government and third-party payors may not provide sufficient coverage or reimbursement, which would negatively impact the demand for our products; 37 Table of Contents • we may not be able to supply commercial material to our partners and our partners may not be able to maintain or establish sufficient and acceptable commercial manufacturing, either directly or through third-party manufacturers; • the commercial demand and acceptance for our products by healthcare providers and by patients may not be sufficient to result in substantial product revenues to us or to our partners and may result in little to no revenue, milestone payments, or royalties to us; • effectiveness of marketing and commercialization efforts for our products by us or our partners; • market satisfaction with existing alternative therapies; • perceived efficacy relative to other available therapies; • disease prevalence; • cost of treatment; • our pricing and reimbursement strategy may not be effective; • new legislative or regulatory proposals may influence our pricing and reimbursement strategy, which could impact product revenues; • pricing and availability of imports or alternative products; • marketing and sales activities of competitors; • shifts in the medical community to new treatment paradigms or standards of care; and • relative convenience and ease of administration.
Similarly, if the contract research organizations or third-party contractors that conduct our initial or late-stage clinical trials, conduct our toxicology or other studies, manufacture our starting materials, drug substance and product candidates, provide laboratory testing or other services in connection with our clinical trials, or assist with our regulatory function breach their obligations to us, perform their services inconsistent with industry standards, or fail to comply with regulatory requirements, this would delay or prevent both the development of our product candidates and the availability of any potential commercial product.
Similarly, if the contract research organizations or third-party contractors that conduct our initial or late-stage clinical trials, conduct our toxicology or other studies, manufacture our starting materials, drug substance and product candidates, provide laboratory testing or other services (including clinical operation services) in connection with our clinical trials, provide medical writing services, or assist with our regulatory function breach their obligations to us, perform their services inconsistent with industry standards, or fail to comply with regulatory requirements, this would delay or prevent both the development of our product candidates and the availability of any potential commercial product.
We and our third-party vendors store commercial product, clinical and stability samples at our facilities that could be damaged if the facilities incur physical damage or in the event of an extended power failure.
We and our third-party vendors store commercial product, clinical and stability samples, and manufacturing data at our facilities that could be damaged if the facilities incur physical damage or in the event of an extended power failure.
A breakdown, invasion, corruption, destruction, or interruption of critical information technology systems could negatively impact operations.
A breakdown, invasion, corruption, destruction, or interruption of information technology systems could negatively impact operations.
See “Business—Competition” in Part I, Item 1 of this report for further discussion of our competitors, competitive products or programs, and the competitive conditions in these and other therapeutic areas. If one or more of our competitors’ products or programs, including potential competitors not currently identified, are successful, the market for our products may be reduced or eliminated.
See “Business—Competition” in Part I, Item 1 of this report for further discussion of our competitors, competitive products or programs, and the competitive conditions in these and other therapeutic areas. 38 Table of Contents If one or more of our competitors’ products or programs, including potential competitors not currently identified, are successful, the market for our products may be reduced or eliminated.
We wrote off the balance due under the PhaRMA Notes to other income as a debt extinguishment as of December 31, 2021. See “Note 8—Royalty Monetizations—RAPIACTA—Non-Recourse Notes Payable—Debt Extinguishment” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this report for additional information about the write-off.
We wrote off the balance due under the PhaRMA Notes to other income as a debt extinguishment as of December 31, 2021. See “Note 8—Royalty Financing Obligations—RAPIACTA—Non-Recourse Notes Payable—Debt Extinguishment” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this report for additional information about the write-off.
These provisions and other provisions of our Amended and Restated Bylaws and of Delaware law applicable to us could delay or make more difficult a merger, tender offer or proxy contest involving us. We have never paid dividends on our common stock and do not anticipate doing so in the foreseeable future.
These provisions and other provisions of our Amended and Restated By-Laws and of Delaware law applicable to us could delay or make more difficult a merger, tender offer or proxy contest involving us. We have never paid dividends on our common stock and do not anticipate doing so in the foreseeable future.
Our competitors in the United States and elsewhere are numerous and include, among others, major multinational pharmaceutical and chemical companies and specialized biotechnology firms. Most of these competitors have greater 34 Table of Contents resources than we do, including greater financial resources, larger research and development staffs and more experienced manufacturing, marketing, and sales organizations.
Our competitors in the United States and elsewhere are numerous and include, among others, major multinational pharmaceutical and chemical companies and specialized biotechnology firms. Most of these competitors have greater resources than we do, including greater financial resources, larger research and development staffs and more experienced manufacturing, marketing, and sales organizations.
Our ability to receive revenue from products we or our partners commercialize is subject to several risks, including: • we or our partners may fail to complete clinical trials successfully, or satisfy post-marketing commitments, sufficient to obtain and maintain regulatory agency marketing approval; • many competitors are more experienced and have significantly more resources, and their products could reach the market faster, be more cost effective or have a better efficacy or tolerability profile than our products and product candidates; • we may fail to employ a comprehensive and effective intellectual property strategy, which could result in decreased commercial value of our Company, our products and product candidates, or royalties associated with such products (e.g., the loss of the peramivir patent in Korea, which may result in a reduced royalty from Green Cross); • we may fail to employ a comprehensive and effective regulatory strategy, which could result in a delay or failure in commercialization of our products; • our and our partners’ ability to successfully commercialize our products is affected by the competitive landscape, which cannot be fully known at this time; • revenue from product sales depends on our ability to obtain and maintain favorable pricing; • reimbursement is constantly changing, which could greatly affect usage of our products; • future revenue from product sales will depend on our ability to successfully complete clinical studies, obtain regulatory approvals, and manufacture, market, distribute and commercialize our approved drugs; and • the impact of the COVID-19 pandemic on us or our partners.
Our ability to receive revenue from products we or our partners commercialize is subject to several risks, including: • we or our partners may fail to complete clinical trials successfully, or satisfy post-marketing commitments, sufficient to obtain and maintain regulatory agency marketing approval; • many competitors are more experienced and have significantly more resources, and their products could reach the market faster, be more cost effective or have a better efficacy or tolerability profile than our products and product candidates; • we may fail to employ a comprehensive and effective intellectual property strategy, which could result in decreased commercial value of our Company, our products and product candidates, or royalties associated with such products (e.g., the loss of the peramivir patent in Korea, which may result in a reduced royalty from Green Cross); • we may fail to employ a comprehensive and effective regulatory strategy, which could result in a delay or failure in commercialization of our products; • our and our partners’ ability to successfully commercialize our products is affected by the competitive landscape, which cannot be fully known at this time; • revenue from product sales depends on our ability to obtain and maintain favorable pricing; • reimbursement is constantly changing, which could greatly affect usage of our products; • future revenue from product sales will depend on our ability to successfully complete clinical studies, obtain regulatory approvals, and manufacture, market, distribute and commercialize our approved drugs; and 35 Table of Contents • the impact of public health emergencies or the outbreak of disease, such as the COVID-19 pandemic, on us or our partners.
Our Amended and Restated Bylaws provide that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, stockholders, employees or agents to us or our stockholders, (iii) any action asserting a claim against us 48 Table of Contents or any of our directors, officers, stockholders, employees or agents arising out of or relating to any provision of the General Corporation Law of Delaware or our Certificate of Incorporation or Amended and Restated Bylaws, or (iv) any action against us or any of our directors, officers, stockholders, employees or agents governed by the internal affairs doctrine of the State of Delaware.
Our Amended and Restated By-Laws provide that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, stockholders, employees or agents to us or our stockholders, (iii) any action asserting a claim against us or any of our directors, officers, stockholders, employees or agents arising out of or relating to any provision of the General Corporation Law of Delaware or our Certificate of Incorporation or Amended and Restated By-Laws, or (iv) any action against us or any of our directors, officers, stockholders, employees or agents governed by the internal affairs doctrine of the State of Delaware.
Our failure to engage in successful collaborations at any one of these stages would greatly impact our business. If we do not license enzyme targets or inhibitors from academic institutions or from other biotechnology companies on acceptable terms, or at all, our drug development efforts would suffer.
Our failure to engage in successful collaborations at any one of these stages would greatly impact our business. If we do not license protein targets or inhibitors from academic institutions or from other biotechnology companies on acceptable terms, or at all, our drug development efforts could suffer.
Advertising and promotion are subject to stringent FDA rules and oversight, and as an NDA holder, we may be held responsible for any advertising and promotion that is not in compliance with the rules and regulations. Applicable regulatory authorities, competitors, and other third parties may take the position that we are not in compliance with such regulations.
Advertising and promotion are subject to stringent oversight from the FDA and foreign regulators, and as an NDA holder, we may be held responsible for any advertising and promotion that is not in compliance with applicable rules and regulations. Applicable regulatory authorities, competitors, and other third parties may take the position that we are not in compliance with such regulations.
As we continue to expand our operations internationally, our exposure to foreign currency transaction gains or losses may become 44 Table of Contents more significant. See “Quantitative and Qualitative Disclosures about Market Risk—Foreign Currency Risk” in Part II, Item 7A of this report for additional information about our foreign currency risk.
As we continue to expand our operations internationally, our exposure to foreign currency transaction gains or losses may become more significant. See “Quantitative and Qualitative Disclosures about Market Risk—Foreign Currency Risk” in Part II, Item 7A of this report for additional information about our foreign currency risk.
Government to unilaterally: • terminate or reduce the scope of our contract with or without cause; • interpret relevant regulations (federal acquisition regulation clauses); • require performance under circumstances which may not be favorable to us; • require an in-process review where the U.S.
Government to unilaterally: • terminate or reduce the scope of our contract with or without cause; • interpret relevant regulations (federal acquisition regulation clauses); • require performance under circumstances which may not be favorable to us; 45 Table of Contents • require an in-process review where the U.S.
Any delay in obtaining, or an inability to obtain, any marketing approvals, as a result of Brexit or otherwise, would prevent us from commercializing our product 45 Table of Contents candidates in the United Kingdom and/or the European Union and restrict our ability to generate revenues and achieve and sustain profitability.
Any delay in obtaining, or an inability to obtain, any marketing approvals, as a result of Brexit or otherwise, would prevent us from commercializing our product candidates in the United Kingdom and/or the European Union and restrict our ability to generate revenues and achieve and sustain profitability.
Progression of our product candidates through the clinical development process is dependent upon our trials indicating that our product candidates have adequate safety and efficacy in the patients being treated by achieving pre-determined safety and efficacy endpoints according to the clinical trial protocols, and adequate benefit-risk profile.
Progression of our product candidates through the clinical development process is dependent upon our trials indicating that our product candidates have adequate safety and efficacy in the patients being treated by achieving pre-determined safety and efficacy endpoints according to the clinical trial protocols, as well as an adequate benefit-risk profile.
In the case of a continuing event of default under the Credit Agreement, the lenders under the Credit Agreement could elect to declare all amounts outstanding to be immediately due and payable, proceed against the collateral in which we granted to the lenders a security interest, or otherwise exercise the rights of a secured creditor.
In the case of a continuing event of default under the Pharmakon Loan Agreement, the lenders under the Pharmakon Loan Agreement could elect to declare all amounts outstanding to be immediately due and payable, proceed against the collateral in which we granted to the lenders a security interest, or otherwise exercise the rights of a secured creditor.
There can be no assurance that any of our plans will be successful or that additional capital will be available to us on reasonable terms, or at all, when needed.
There can be no assurance that any of our plans will be successful or that additional capital will be available to us on reasonable terms, or at all, if needed.
Neither the United States Patent and Trademark Office (“USPTO”), the Patent Cooperation Treaty offices, nor the courts of the United States and other jurisdictions have consistent policies nor predictable rulings regarding the breadth of claims allowed or the degree of protection afforded under many biotechnology and pharmaceutical patents.
Neither the United States Patent and Trademark Office (“USPTO”), the Patent Cooperation Treaty offices, nor the courts of the United States and other jurisdictions have consistent policies nor predictable rulings regarding the breadth of claims allowed or the degree of protection afforded under many 42 Table of Contents biotechnology and pharmaceutical patents.
The PhaRMA Notes are secured principally by (i) certain royalty and milestone payments under the Shionogi Agreement, pursuant to which Shionogi licensed from us the rights to market peramivir in Japan and Taiwan and (ii) the pledge by us of our equity interest in Royalty Sub.
The PhaRMA Notes are secured principally by (i) certain royalty and milestone payments under our agreement with Shionogi (the “Shionogi Agreement”), pursuant to which Shionogi licensed from us the rights to market peramivir in Japan and Taiwan and (ii) the pledge by us of our equity interest in Royalty Sub.
Because substantially all of our assets are pledged to secure the Credit Agreement obligations, our ability to incur additional secured indebtedness or to sell or dispose of assets to raise capital may be impaired, which could have an adverse effect on our financial flexibility.
Because substantially all of our assets are pledged to secure the Pharmakon Loan Agreement obligations, our ability to incur additional secured indebtedness or to sell or dispose of assets to raise capital may be impaired, which could have an adverse effect on our financial flexibility.
Any of these factors could significantly harm our international expansion of operations and adversely affect our business and results of operations. Additionally, in some countries, such as Japan and the countries of the European Union, the pricing of prescription pharmaceuticals is subject to governmental control and access.
Any of these factors could significantly harm our international expansion of operations and adversely affect our business and results of operations. 48 Table of Contents Additionally, in some countries, such as Japan and the countries of the European Union, the pricing of prescription pharmaceuticals is subject to governmental control and access.
Doing business internationally involves a number of risks, including, but not limited to: • multiple, conflicting, and changing laws and regulations such as privacy and data regulations, transparency regulations, tax laws, export and import restrictions, employment laws, regulatory requirements, and other governmental approvals, permits, and licenses; • introduction of new health authority requirements and/or changes in health authority expectations; • failure by us or our partners to obtain and maintain regulatory approvals for the use of our products in various countries; • complexities and difficulties in obtaining and maintaining protection for, and enforcing, our intellectual property; • difficulties in staffing and managing foreign operations; • complexities associated with managing multiple payor reimbursement regimes, government payors, or patient self-pay systems; • limits on our ability to penetrate international markets; • financial risks, such as longer payment cycles, difficulty collecting accounts receivable, the impact of local and regional financial crises on demand and payment for our products, and exposure to foreign currency exchange rate fluctuations, which have been increasingly prevalent alongside a fluctuating U.S. dollar; • natural disasters and political and economic instability, including wars (e.g., the conflict in Ukraine), terrorism, political unrest, results of certain elections and votes, actual or threatened public health emergencies and outbreak of disease (e.g., the ongoing COVID-19 pandemic), boycotts, adoption or expansion of government trade restrictions, and other business restrictions; • certain expenses including, among others, expenses for travel, translation, and insurance; • regulatory and compliance risks that relate to maintaining accurate information and control over commercial operations and activities that may fall within the purview of the U.S.
Doing business internationally involves a number of risks, including, but not limited to: • multiple, conflicting, and changing laws and regulations such as privacy and data regulations, transparency regulations, tax laws, export and import restrictions, employment laws, regulatory requirements, and other governmental approvals, permits, and licenses; • introduction of new health authority requirements and/or changes in health authority expectations; • failure by us or our partners to obtain and maintain regulatory approvals for the use of our products in various countries; • complexities and difficulties in obtaining and maintaining protection for, and enforcing, our intellectual property; • difficulties in staffing and managing foreign operations; • complexities associated with managing multiple payor reimbursement regimes, government payors, or patient self-pay systems; • limits on our ability to penetrate international markets; • financial risks, such as longer payment cycles, difficulty collecting accounts receivable, the impact of local and regional financial crises on demand and payment for our products, and exposure to foreign currency exchange rate fluctuations, which have been increasingly prevalent alongside a fluctuating U.S. dollar; • natural disasters and political and economic instability, including wars (e.g., the Ukraine-Russia and Israel-Hamas conflicts), terrorism, political unrest, results of certain elections and votes, actual or threatened public health emergencies and outbreak of disease (e.g., the COVID-19 pandemic), boycotts, adoption or expansion of government trade restrictions, and other business restrictions; • certain expenses including, among others, expenses for travel, translation, and insurance; • regulatory and compliance risks that relate to maintaining accurate information and control over commercial operations and activities that may fall within the purview of the FCPA, including its books and records provisions or anti-bribery provisions, or the U.K.
We have sustained operating losses for the majority of our corporate history and expect that our 2023 expenses will exceed our 2023 revenues. We expect to continue to incur operating losses and negative cash flows unless and until revenues reach a level sufficient to support ongoing operations.
We have sustained operating losses for the majority of our corporate history and expect that our total 2024 expenses will exceed our total 2024 revenues. We expect to continue to incur operating losses and negative cash flows unless and until revenues reach a level sufficient to support ongoing operations.
Compliance with U.S. and international data protection laws and regulations could require us to take on more onerous obligations in our contracts, restrict our ability to collect, use, and disclose data, or in some cases, impact our ability to operate in certain jurisdictions.
Compliance with stringent and evolving U.S. data protection laws and regulations could require us to take on more onerous obligations in our contracts, restrict our ability to collect, use, and disclose data, or in some cases, impact our ability to operate in certain jurisdictions.
Even if we or our partners successfully complete clinical trials for our product candidates, we or our partners might not file the required regulatory submissions in a timely manner or may not receive regulatory approval for the product candidates, which in either case would adversely impact or preclude our ability to generate any revenues from product sales or licensing arrangements.
Even if we or our partners successfully complete clinical trials for our product candidates, we or our partners might not file the required regulatory submissions in a timely manner or may not 30 Table of Contents receive regulatory approval for the product candidates, which in either case would adversely impact or preclude our ability to generate any revenues from product sales or licensing arrangements.
The FDA and foreign regulatory authorities may also impose post-approval commitments on us for approved products, which we may not complete successfully or on time for any number of reasons, including but not limited to lack of funds to complete the studies and insufficient interest by appropriate sites, investigators or study subjects. We are currently subject to certain post-approval commitments.
The FDA and foreign regulatory authorities may also impose post-approval commitments on us for approved products, which we may not complete successfully or on time for any number of reasons, including, but not limited to, lack of funds to complete the studies and insufficient interest by appropriate sites, investigators or study subjects.
We and our partners incur substantial 27 Table of Contents expense for, and devote significant time to, preclinical testing and clinical trials, yet we cannot be certain that the tests and trials will ever result in the commercial sale of a product.
We and our partners incur substantial expense for, and devote significant time to, preclinical testing and clinical trials, yet we cannot be certain that the tests and trials will ever result in the commercial sale of a product.
In such event, we may not realize the benefit of future royalty payments, if any, that might otherwise accrue to us following repayment of the PhaRMA Notes, we may incur legal costs, and we might otherwise be adversely affected.
In such event, we may not realize the benefit of future royalty payments, if any, that might 46 Table of Contents otherwise accrue to us following repayment of the PhaRMA Notes, we may incur legal costs, and we might otherwise be adversely affected.
The rights of the holders of any preferred stock that may be issued in the future may adversely affect the rights of the holders of common stock. The issuance of preferred stock could make it more difficult for third parties to acquire a majority of our outstanding voting stock.
The rights of the holders of any preferred stock that may be issued in the future may adversely affect the 55 Table of Contents rights of the holders of common stock. The issuance of preferred stock could make it more difficult for third parties to acquire a majority of our outstanding voting stock.
If we fail to obtain additional financing or acceptable partnership arrangements as and when needed, we may be unable to complete the development and commercialization of our products and product candidates or continue operations. As our programs advance, our costs are likely to increase. Our current and planned discovery, development, approval, and commercialization efforts will require significant capital.
If we fail to obtain additional financing or acceptable partnership arrangements if and when needed, we may be unable to complete the development and commercialization of our products and product candidates or continue operations. As our programs advance, our costs could increase. Our current and planned discovery, development, approval, and commercialization efforts may require significant capital.
We have experienced, and may continue to experience, significant growth in the number of our employees and the scope of our operations in the United States and internationally, particularly in the areas of drug development, regulatory 32 Table of Contents affairs, sales, marketing, and distribution.
We have experienced, and may continue to experience, significant growth in the number of our employees and the scope of our operations in the United States and internationally, particularly in the areas of drug development, regulatory affairs, sales, marketing, and distribution.
Our business may be adversely affected by any related economic downturn, volatile geopolitical and business environment, or continued market instability. Unstable market and economic conditions could materially affect our ability to access the equity or debt capital markets or obtain other sources of capital, which could negatively affect our liquidity.
Our business may be adversely affected by any related economic downturn, volatile geopolitical and business environment, or continued market instability. Unstable market and economic conditions could materially affect our ability to access the equity or debt capital markets or obtain other sources of capital if needed in the future, which could negatively affect our liquidity.
Currently, we have established collaborative relationships, including with Torii for the commercialization of ORLADEYO in Japan, with third-party distributors for ORLADEYO in certain other markets, and with each of Shionogi 30 Table of Contents and Green Cross for the development and commercialization of peramivir.
Currently, we have established collaborative relationships, including with Torii for the commercialization of ORLADEYO in Japan, with third-party distributors for ORLADEYO in certain other markets, and with each of Shionogi and Green Cross for the development and commercialization of peramivir.
For example, the conflict could lead to sanctions, embargoes, supply shortages, regional instability, geopolitical shifts, cyber-attacks, other retaliatory actions, and adverse effects on macroeconomic conditions, currency exchange rates, and financial markets, which could adversely impact our operations and financial results, as well as those of third parties with whom we conduct business.
For example, the conflicts could lead to sanctions, embargoes, supply shortages, regional instability, geopolitical shifts, cyber-attacks, other retaliatory actions, and adverse effects on macroeconomic conditions, 56 Table of Contents currency exchange rates, and financial markets, which could adversely impact our operations and financial results, as well as those of third parties with whom we conduct business.
Further, we may not have worldwide patent protection for all of our product candidates and our intellectual property rights may not be legally protected or enforceable in all countries throughout the 38 Table of Contents world.
Further, we may not have worldwide patent protection for all of our product candidates and our intellectual property rights may not be legally protected or enforceable in all countries throughout the world.
We have contracts with BARDA/HHS and NIAID/HHS for the development of galidesivir as a treatment for diseases caused by RNA pathogens, including Marburg virus disease, Yellow Fever and Ebola virus disease. In contracting with these government agencies, we are subject to various U.S.
We had contracts with BARDA/HHS and NIAID/HHS for the development of galidesivir as a treatment for diseases caused by RNA pathogens, including Marburg virus disease, Yellow Fever and Ebola virus disease. In contracting with these government agencies, we became subject to various U.S.
If our operations or those of third parties with whom we conduct business are impaired or curtailed as a result of these events, the development and commercialization of our products and product candidates could be stopped or delayed, or the costs of such development and commercialization activities could increase, any of which could have a material adverse impact on our business.
If our operations or those of third parties with whom we conduct business, such as development partners, manufacturers, CROs and others, are impaired or curtailed as a result of such events, the development and commercialization of our products and product candidates could be stopped or delayed, or the costs of such development and commercialization activities could increase, any of which could have a material adverse impact on our business.
Government contract requirements, including general 40 Table of Contents clauses for a cost-reimbursement research and development contract, which may limit our reimbursement. While all government funding for galidesivir expired in 2022, we still face risks related to our U.S. Government contracts. U.S.
Government contract requirements, including general clauses for a cost-reimbursement research and development contract, which may limit our reimbursement. While all government funding for galidesivir expired in 2022, we still face risks related to our U.S. Government contracts. U.S.
We are subject to data security and privacy risks, and our actual or perceived failure to comply with regulations and other legal obligations related to privacy and data protection could harm our business. We are subject to legal obligations related to privacy and data protection.
We may be subject to data privacy and security risks, and our actual or perceived failure to comply with regulations and other legal obligations related to privacy and data protection could harm our business.
In addition, a recession or market correction could materially affect our business and the value of our common stock. Market and economic conditions continue to evolve, with the ultimate impacts being uncertain and subject to change. These effects could be material, and we will continue to monitor the economic climate, COVID-19 pandemic, and the conflict in Ukraine closely.
In addition, a recession or market correction could materially affect our business and the value of our common stock. Market and economic conditions continue to evolve, with the ultimate impacts being uncertain and subject to change. These effects could be material, and we will continue to monitor the economic climate closely.
Any penalties, damages, 36 Table of Contents fines, curtailment or restructuring of our operations could adversely affect our ability to operate our business and our financial results. Although compliance programs can mitigate the risk of investigation and prosecution for violations of these laws, the risks cannot be entirely eliminated.
Any penalties, damages, fines, debarment, exclusion, curtailment or restructuring of our operations could adversely affect our ability to operate our business and our financial results. Although compliance programs can mitigate the risk of investigation and prosecution for violations of these laws, the risks cannot be entirely eliminated.
In addition, we currently conduct clinical studies and regulatory activities and have hired, and expect to 43 Table of Contents continue hiring, employees outside of the United States.
In addition, we currently conduct clinical studies and regulatory activities and have hired, and expect to continue hiring, employees outside of the United States.
Amounts outstanding under the Credit Agreement are secured by a security interest in, subject to certain exceptions, substantially all of our assets.
Amounts outstanding under the Pharmakon Loan Agreement are secured by a security interest in, subject to certain exceptions, substantially all of our assets.
Furthermore, the approval of our products and any other future product candidates may be subject to requirements for costly post-approval testing and surveillance to monitor their safety or efficacy.
Furthermore, the approval of our products and any other future product candidates may be subject to requirements for costly post-approval testing and surveillance to monitor their safety or efficacy or certain post-approval labeling, packaging and storage requirements.
For example, we may be subject to the California Consumer Privacy Act, which gives California residents expanded rights to access and require deletion of their personal information, opt out of certain personal information sharing, and receive detailed information about how their personal information is used.
For example, we may be subject to the CCPA, which gives California residents expanded rights to access and require deletion of their personal data, opt out of certain personal data sharing, and receive detailed information about how their personal data is used.
We have backup power systems in addition to backup generators to maintain power to all critical functions, but any loss of these products or samples could result in significant delays in our commercialization or drug development process. In addition, we store most of our preclinical and clinical data at our facilities. Duplicate copies of most critical data are secured off-site.
We have backup power systems in addition to backup generators to maintain power to all critical functions, but any loss of these products or samples could result in significant delays in our commercialization or drug development process. In addition, we store most of our preclinical and clinical data at our facilities.
Undesirable or inconclusive data in our preclinical studies and clinical trials or side effects in humans could result in the FDA or foreign regulatory authorities (including, e.g., the EMA, the MHLW or the MHRA) refusing to approve a product candidate for any targeted indications or imposing restrictions or warnings that could impact development or the ultimate commercial viability of a product candidate.
Undesirable or inconclusive data in our preclinical studies and clinical trials or side effects in humans could result in the FDA or foreign regulatory authorities (including, e.g., the EMA, the MHLW or the United Kingdom’s Medicines and Healthcare products Regulatory Agency (“MHRA”)) refusing to approve a product candidate for any targeted indications or imposing restrictions or warnings that could impact development or the ultimate commercial viability of a product candidate.
While we currently have insurance for our business, property, directors and officers, and our products, insurance is increasingly more costly and narrower in scope, and we may be required to assume more risk in the future.
Insurance coverage is increasingly more costly and difficult to obtain or maintain. While we currently have insurance for our business, property, directors and officers, and our products, insurance is increasingly more costly and narrower in scope, and we may be required to assume more risk in the future.
Additional funding, whether through additional sales of securities, additional borrowings, royalty or other monetization transactions, collaborative arrangements with partners, including corporate partners such as Torii, or from other sources, may not be available when needed or in a form or on terms acceptable to us.
Additional funding, whether through additional sales of securities, additional borrowings, royalty or other monetization transactions, collaborative arrangements with partners, or from other sources, may not be available if or when needed or in a form or on terms acceptable to us.
We have incurred significant indebtedness, which could adversely affect our business. Additionally, our Credit Agreement contains conditions and restrictions that limit our flexibility in operating our business.
We have incurred significant indebtedness, which could adversely affect our business. Additionally, the Pharmakon Loan Agreement contains conditions and restrictions that limit our flexibility in operating our business.
While we do store duplicate copies of most of our clinical data offsite and a significant portion of our data is included in regular backups of our systems, we could lose important data if our facilities incur damage, or if our vendor data systems fail, suffer damage or are destroyed.
While duplicate copies of most clinical data are secured off-site, and a significant portion of our data is included in regular backups of our systems, we could lose important data if our facilities incur damage, or if our vendor data systems fail, suffer damage or are destroyed.
For example, it: • increases our vulnerability to adverse general economic or industry conditions; • limits our flexibility in planning for, or reacting to, changes in our business or the industry in which we operate; • makes us more vulnerable to increases in interest rates, as borrowings under our Credit Agreement are at variable rates; • requires us to dedicate a portion of our cash flow from operations to interest payments, limiting the availability of cash for other purposes; • limits our ability to obtain additional financing or refinancing in the future for working capital or other purposes; and • places us at a competitive disadvantage compared to our competitors that have less indebtedness.
For example, it: • increases our vulnerability to adverse general economic or industry conditions; • limits our flexibility in planning for, or reacting to, changes in our business or the industry in which we operate; • makes us more vulnerable to increases in interest rates, as borrowings under the Pharmakon Loan Agreement accrue interest at variable, uncapped rates, such that increases in interest rates will increase the associated interest payments that we are required to make on outstanding borrowings; • requires us to dedicate a portion of our cash flow from operations to interest payments, limiting the availability of cash for other purposes; • limits our ability to obtain additional financing or refinancing in the future for working capital or other purposes; and • places us at a competitive disadvantage compared to our competitors that have less indebtedness.
A breach of any of these covenants could result in an event of default under the Credit Agreement.
A breach of any of these covenants could result in an event of default under the Pharmakon Loan Agreement.
If our operations with respect to our products that are subject to healthcare laws and regulations are found to be in violation of any of the healthcare fraud and abuse laws described above or in “Business—Government Regulation” in Part I, Item 1 of this report or any other governmental regulations that apply to us, we may be subject to penalties, including civil and criminal penalties, damages, fines and the curtailment or restructuring of our operations.
If our operations with respect to our products that are subject to healthcare laws and regulations are found to be in violation of any of the healthcare fraud and abuse laws described above or in “Business—Government Regulation” in Part I, Item 1 of this report or any other governmental regulations that apply to us, we may be subject to penalties, including civil and criminal penalties, damages, fines, debarment or exclusion from participating in government-funded healthcare programs such as Medicare or Medicaid, and the curtailment or restructuring of our operations.
Our expenses, revenues and cash utilization rate could vary significantly depending on many factors, including: our ability to effectively manage our product candidate pipeline; our ability to obtain regulatory approvals for our product candidates, including BCX10013; our ability to maintain regulatory approvals for, successfully commercialize, and achieve market acceptance of our products, including ORLADEYO; our ability to raise additional capital; the amount of funding we receive from partnerships with third parties for the development and commercialization of our products and product candidates (including our collaboration with Torii); the commercial success of our products achieved by our partners; the progress and results of our current and proposed clinical trials for our product candidates; and the progress made in the manufacture of our lead products and the progression of our other programs. 28 Table of Contents In order to continue future operations, progress our drug discovery and development programs, and commercialize our current products and product candidates, we may be required to raise additional capital.
Our expenses, revenues and cash utilization rate could vary significantly depending on many factors, including: our ability to effectively manage our product candidate pipeline; our ability to obtain regulatory approvals for our product candidates; our ability to maintain regulatory approvals for, successfully commercialize, and achieve market acceptance of our products, including ORLADEYO; our ability to raise additional capital if needed; our ability to secure partnerships with third parties for our product candidates when deemed advisable (such as for the potential out-licensing of the late-stage development and commercialization of BCX10013); the amount of funding we receive from partnerships with third parties for the development and commercialization of our products and product candidates; the commercial success of our products achieved by our partners; the progress and results of our current and proposed clinical trials for our product candidates; and the progress made in the manufacture of our lead products and the progression of our other programs. 31 Table of Contents In order to continue future operations, progress our drug discovery and development programs, and commercialize our current products and product candidates, we may be required to raise additional capital.
These laws include the GDPR and similar national legislation, the EU Clinical Trials Regulation, and the e-Privacy Directive (2002/58/EC), and are discussed in more detail in “Business—Government Regulation—Data Privacy and Security Laws” in Part I, Item 1 of this report.
These laws include the GDPR and similar national legislation within the EEA, the United Kingdom GDPR, Switzerland’s Federal Data Protection Act, the EU Clinical Trials Regulation, and the e-Privacy Directive (2002/58/EC), and are discussed in more detail in “Business—Government Regulation—Data Privacy and Security Laws” in Part I, Item 1 of this report.
If we are unable to achieve and sustain profitability, the market value of our common stock will likely decline. We may need to raise additional capital in the future. If we are unable to raise capital as and when needed, we may need to adjust our operations.
If we are unable to achieve and sustain profitability on our anticipated timeline, or at all, the market value of our common stock will likely decline. We may need to raise additional capital in the future. If we are unable to raise capital if and when needed, we may need to adjust our operations.
Furthermore, our Credit Agreement contains various covenants that limit our ability to engage in specified types of transactions.
Furthermore, the Pharmakon Loan Agreement contains various covenants that limit our ability to engage in specified types of transactions.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe currently lease approximately 24,500 square feet in Durham through leases expiring December 31, 2023 and June 30, 2024, and we lease approximately 34,000 square feet in Birmingham through October 31, 2026.
Biggest changeWe currently lease approximately 24,500 square feet in Durham through leases expiring June 30, 2024 and August 31, 2025, and we lease approximately 49,000 square feet in Birmingham through July 31, 2030, with options for additional extensions. We also contract for smaller offices in a number of other countries.
Removed
We recently entered into an amendment to our lease in Birmingham to add additional space in 2023 and to extend the term of the lease at that time, with options for additional extensions. We also contract for smaller offices in a number of other countries. We believe that our facilities are adequate for our current and planned future operations.
Added
We believe that our facilities are adequate for our current and planned future operations. ITEM 3. LEGAL PROCEEDINGS None.
Removed
ITEM 3. LEGAL PROCEEDINGS None. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 50 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+0 added−0 removed3 unchanged
Biggest changePERFORMANCE GRAPH FOR BIOCRYST Indexed Comparison Since 2017 51 Table of Contents Beginning Investment at 12/31/17 Investment at 12/31/18 Investment at 12/31/19 Investment at 12/31/20 Investment at 12/31/21 Investment at 12/31/22 BioCryst Pharmaceuticals, Inc. $ 100.00 $ 164.36 $ 70.26 $ 151.73 $ 282.08 $ 233.81 Nasdaq Stock Market (United States) 100.00 94.56 124.03 150.41 189.36 152.00 Nasdaq Pharmaceutical Stocks 100.00 107.95 123.62 136.62 169.94 189.23 The above graph measures the change in a $100 investment in our common stock based on its closing price of $4.91 on December 29, 2017 (the last trading day of the year) and its year-end closing price thereafter.
Biggest changePERFORMANCE GRAPH FOR BIOCRYST Indexed Comparison Since 2018 60 Table of Contents Beginning Investment at 12/31/18 Investment at 12/31/19 Investment at 12/31/20 Investment at 12/31/21 Investment at 12/31/22 Investment at 12/31/23 BioCryst Pharmaceuticals, Inc. $ 100.00 $ 42.75 $ 92.32 $ 171.62 $ 142.26 $ 74.23 Nasdaq Stock Market (United States) 100.00 131.17 159.07 200.26 160.75 203.23 Nasdaq Pharmaceutical Stocks 100.00 114.51 126.56 157.42 175.29 182.08 The above graph measures the change in a $100 investment in our common stock based on its closing price of $8.07 on December 31, 2018 and its year-end closing price thereafter.
Our relative performance is then compared with the CRSP Total Return Indexes for the Nasdaq Stock Market (United States) and Nasdaq Pharmaceutical Stocks. Recent Sales of Unregistered Securities None. Issuer Purchases of Equity Securities There were no repurchases of our common stock during the fourth quarter of 2022. ITEM 6. RESERVED
Our relative performance is then compared with the CRSP Total Return Indexes for the Nasdaq Stock Market (United States) and Nasdaq Pharmaceutical Stocks. Recent Sales of Unregistered Securities None. Issuer Purchases of Equity Securities There were no repurchases of our common stock during the fourth quarter of 2023. ITEM 6. RESERVED
ITEM 5. MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock trades on the Nasdaq Global Select Market under the symbol BCRX. Holders As of January 31, 2023, there were approximately 155 holders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock trades on the Nasdaq Global Select Market under the symbol BCRX. Holders As of February 23, 2024, there were approximately 152 holders of record of our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

82 edited+47 added−56 removed51 unchanged
Biggest changeThese covenants limit our ability to, among other things, grant certain types of liens on our assets; make certain investments; incur or assume certain debt; engage in certain mergers, acquisitions, and similar transactions; dispose of assets; license certain property; distribute dividends; make certain restricted payments; change the nature of our business; engage in transactions with affiliates and insiders; prepay other indebtedness; or engage in sale and leaseback transactions.
Biggest changeCertain of the customary negative covenants limit the ability of the Company and certain of its subsidiaries to, among other things, dispose of assets; engage in mergers, acquisitions, and similar transactions; incur additional indebtedness; grant liens; make investments; pay dividends or make distributions or certain other restricted payments in respect of equity; prepay other indebtedness; enter into restrictive 68 Table of Contents agreements; undertake fundamental changes; or amend certain material contracts, among other customary covenants, in each case subject to certain exceptions.
We regularly evaluate other opportunities to fund future operations, including: (1) out-licensing rights to certain of our products or product candidates, pursuant to which we would receive cash milestone payments; (2) raising additional capital through equity or debt financings or from other sources, including royalty or other monetization transactions; (3) obtaining additional product candidate regulatory approvals, which would generate revenue, milestone payments and cash flow; (4) reducing spending on one or more research and development programs, including by discontinuing development; (5) restructuring operations to change our overhead structure and/or (6) securing or increasing U.S.
We regularly evaluate other opportunities to fund future operations, including: (1) out-licensing rights to certain of our products or product candidates, pursuant to which we would receive cash milestone payments; (2) raising additional capital through equity or debt financings or from other sources, including royalty or other monetization transactions; (3) obtaining additional product candidate regulatory approvals, which would generate revenue, milestone payments and cash flow; (4) reducing spending on one or more research and development programs, including by discontinuing development; (5) restructuring operations to change our overhead structure; and/or (6) securing U.S.
See “Risk Factors—Risks Relating to Our Business—Financial and Liquidity Risks” and “Risk Factors—Risks Relating to Our Business—Risks Relating to Drug Development and Commercialization—If we fail to obtain additional financing or acceptable partnership arrangements as and when needed, we may be unable to complete the development and commercialization of our products and product candidates or continue operations” in Part I, Item 1A of this report for further discussion of the risks related to obtaining additional capital.
See “Risk Factors—Risks Relating to Our Business—Financial and Liquidity Risks” and “Risk Factors—Risks Relating to Our Business—Risks Relating to Drug Development and Commercialization—If we fail to obtain additional financing or acceptable partnership arrangements if and when needed, we may be unable to complete the development and commercialization of our products and product candidates or continue operations” in Part I, Item 1A of this report for further discussion of the risks related to obtaining additional capital.
Raw materials and work-in-process includes all inventory costs prior to packaging and labeling, including raw material, active product ingredient, and drug product. Finished goods include packaged and labeled products. Our inventories are subject to expiration dating. We regularly evaluate the carrying value of our inventories and provide valuation reserves for any estimated obsolete, short-dated or unmarketable inventories.
Raw materials and work-in-process include all inventory costs prior to packaging and labeling, including raw material, active product ingredient, and the drug product. Finished goods include packaged and labeled products. Our inventories are subject to expiration dating. We regularly evaluate the carrying value of our inventories and provide valuation reserves for any estimated obsolete, short-dated or unmarketable inventories.
Recent Accounting Pronouncements “Note 1—Significant Accounting Policies and Concentrations of Risk” to the Consolidated Financial Statements included in Part II, Item 8 of this report discusses accounting pronouncements recently issued or proposed but not yet required to be adopted.
Recent Accounting Pronouncements “Note 1—Significant Accounting Policies and Concentrations of Risk” in the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this report discusses accounting pronouncements recently issued or proposed but not yet required to be adopted.
Our current and planned clinical trials, plus the related development, manufacturing, regulatory approval process requirements, and additional personnel resources and testing required for the continuing development of our product candidates and the commercialization of our products will consume significant capital resources and will increase our expenses.
Our current and planned clinical trials, plus the related development, manufacturing, regulatory approval process requirements, and additional personnel resources and testing required for the continuing development of our product candidates and the commercialization of our products will consume significant capital resources and could increase our expenses.
Interest expense for the year ended December 31, 2022 consisted of $76.5 million of non-cash interest expense due to the amortization of interest associated with the Royalty Financing Obligations and $22.5 million of interest expense, net of deferred financing amortization, associated with the borrowings under the Credit Agreement.
Interest expense for the year ended December 31, 2022 consisted of $76.5 million of non-cash interest expense due to the amortization of interest associated with the royalty financing obligations and $22.5 million of interest expense, net of deferred financing amortization, associated with the borrowings under the Athyrium Credit Agreement.
In addition, we have outstanding performance-based stock options and restricted stock units for which no compensation expense is recognized until “performance” has occurred. Significant management judgment is also required in determining estimates of future stock price volatility and forfeitures to be used in the valuation of the options.
In addition, we have outstanding performance-based stock options and restricted stock units for which no compensation expense is recognized until “performance” is deemed to have occurred. Significant management judgment is also required in determining estimates of future stock price volatility and forfeitures to be used in the valuation of the options.
Our long-term capital requirements and the adequacy of our available funds will depend upon many factors, including: • market acceptance of approved products and successful commercialization of such products by either us or our partners; • our ability to receive reimbursement and stockpiling procurement contracts; • the progress and magnitude of our research, drug discovery and development programs; • changes in existing collaborative relationships; 58 Table of Contents • our ability to establish additional collaborative relationships with academic institutions, biotechnology or pharmaceutical companies and governmental agencies or other third parties; • the extent to which our partners will share in the costs associated with the development of our programs or run the development programs themselves; • our ability to negotiate favorable development and marketing strategic alliances for certain products and product candidates; • any decision to build or expand internal development and commercial capabilities; • the scope and results of preclinical studies and clinical trials to identify and develop product candidates; • our ability to engage sites and enroll subjects in our clinical trials; • the scope of manufacturing of our products to support our commercial operations and of our product candidates to support our preclinical research and clinical trials; • increases in personnel and related costs to support the development and commercialization of our products and product candidates; • the scope of manufacturing of our drug substance and product candidates required for future NDA filings; • competitive and technological advances; • the time and costs involved in obtaining regulatory approvals; • post-approval commitments for ORLADEYO, RAPIVAB, and other products that receive regulatory approval; and • the costs involved in all aspects of intellectual property strategy and protection, including the costs involved in preparing, filing, prosecuting, maintaining, defending, and enforcing patent claims.
Our long-term capital requirements and the adequacy of our available funds will depend upon many factors, including: • market acceptance of approved products and successful commercialization of such products by either us or our partners; • our ability to receive reimbursement and stockpiling procurement contracts; • the progress and magnitude of our research, drug discovery and development programs; • changes in existing collaborative relationships; • our ability to establish additional collaborative relationships with academic institutions, biotechnology or pharmaceutical companies and governmental agencies or other third parties; • the extent to which our partners will share in the costs associated with the development of our programs or run the development programs themselves; • our ability to negotiate favorable development and marketing strategic alliances for certain products and product candidates; • any decision to build or expand internal development and commercial capabilities; • the scope and results of preclinical studies and clinical trials to identify and develop product candidates; • our ability to engage sites and enroll subjects in our clinical trials; • the scope of manufacturing of our products to support our commercial operations and of our product candidates to support our preclinical research and clinical trials; • increases in personnel and related costs to support the development and commercialization of our products and product candidates; • the scope of manufacturing of our drug substance and product candidates required for future new drug application (“NDA”) filings; • competitive and technological advances; • the time and costs involved in obtaining regulatory approvals; • post-approval commitments for ORLADEYO, RAPIVAB, and other products that receive regulatory approval; and • the costs involved in all aspects of intellectual property strategy and protection, including the costs involved in preparing, filing, prosecuting, maintaining, defending, and enforcing patent claims.
Revenue from sales of ORLADEYO in future periods is subject to uncertainties and will depend on several factors, including the success of our and our partners’ commercialization efforts in the United States and elsewhere, the number of new patients switching to ORLADEYO, patient retention and demand, the number of physicians prescribing ORLADEYO, the rate of monthly prescriptions, reimbursement from third-party and government payors, the conversion of patients from our clinical trials and early access programs to commercial customers, our pricing strategy, and market trends.
Revenue from sales of ORLADEYO in future periods is subject to uncertainties and will depend on several factors, including the success of our and our partners’ commercialization efforts in the United States and elsewhere, the number of new patients switching to ORLADEYO, patient retention and demand, the number of physicians prescribing ORLADEYO, the rate of monthly prescriptions, reimbursement from third-party and government payors, the number of patients receiving free product, the conversion of patients from our clinical trials and early access programs to commercial customers, our pricing strategy, and market trends.
The tax expense for 2022 was primarily the result of amendments to Section 174 of the Internal Revenue Code of 1986, as amended (“IRC”), which no longer permits an immediate deduction for research and development expenditures in the tax year that such costs are incurred.
The tax expense for 2023 was primarily the result of amendments to Section 174 of the Internal Revenue Code of 1986, as amended (“IRC”), which no longer permits an immediate deduction for research and development expenditures in the tax year that such costs are incurred.
Additionally, direct expenses consist of those costs necessary to discontinue and close out a development program, including termination fees and other commitments. Indirect R&D expenses consist of lab supplies and services, facility expenses, depreciation of development equipment and other overhead of our research and development efforts.
Additionally, direct expenses consist of those costs necessary to discontinue and close out a development program, including termination fees and other commitments. Indirect research and development expenses consist of lab supplies and services, facility expenses, depreciation of development equipment and other overhead of our research and development efforts.
RAPIVAB (peramivir injection) is approved in the United States for the treatment of acute uncomplicated influenza for patients six months and older. Peramivir injection is also approved in Canada (RAPIVAB), Australia (RAPIVAB), Japan (RAPIACTA), Taiwan (RAPIACTA), and Korea (PERAMIFLU).
RAPIVAB (peramivir injection) is approved in the United States for the treatment of acute uncomplicated influenza for patients six months and older. Peramivir injection is also approved in Canada (RAPIVAB), Australia (RAPIVAB), Japan (RAPIACTA), Taiwan (RAPIACTA), and Korea (PERAMIFLU). Netherton Syndrome.
These reserves are based on the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable or as a current liability. Overall, these reserves reflect our best estimates of the amount of consideration to which the Company is entitled based on the terms of the applicable contract.
These reserves are based on the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable or as a current liability. Overall, these reserves reflect our best estimates of the amount of consideration to which we are entitled based on the terms of the applicable contract.
Our expenses, revenues and cash utilization rate could vary significantly depending on many factors, including our ability to raise additional capital, the development progress of our collaborative agreements for our product candidates, the amount of funding or assistance, if any, we receive from new partnerships with third parties for the development and/or commercialization of our products and product candidates, the progress and results of our current and proposed clinical trials for our most advanced product candidates, the progress made in the manufacturing of our lead product candidates, the success of our commercialization efforts for, and market acceptance of, our products, and the overall progression of our other programs.
Our expenses, revenues and cash utilization rate could vary significantly depending on many factors, including the development progress of our collaborative agreements for our product candidates, the amount of funding or assistance, if any, we receive from new partnerships with third parties for the development and/or commercialization of our products and product candidates, the progress and results of our current and proposed clinical trials for our most advanced product candidates, the progress made in the manufacturing of our lead product candidates, the success of our commercialization efforts for, and market acceptance of, our products, and the overall progression of our other programs.
We expect at least 70 to 80 percent of our revenue at peak to come from the United States. These expectations are subject to numerous risks and uncertainties that may cause our actual results, performance, or achievements to be materially different.
We expect approximately 80 percent of our revenue at peak to come from the United States. These expectations are subject to numerous risks and uncertainties that may cause our actual results, performance, or achievements to be materially different.
However, we have sustained operating losses for the majority of our corporate history and expect that our 2023 expenses will exceed our 2023 revenues. We expect to continue to incur operating losses and negative cash flows until revenues reach a level sufficient to support ongoing operations.
However, we have sustained operating losses for the majority of our corporate history and expect that our total 2024 expenses will exceed our total 2024 revenues. We expect to continue to incur operating losses and negative cash flows until revenues reach a level sufficient to support ongoing operations.
Changes to collaborations, such as the extensions of the research term or increasing the number of targets or technology covered under an existing agreement, are assessed for whether they represent a modification or should be accounted for as a new contract.
Changes to collaborations, such as 70 Table of Contents the extensions of the research term or increasing the number of targets or technology covered under an existing agreement, are assessed for whether they represent a modification or should be accounted for as a new contract.
Management may be able to control the timing and level of research and development and selling, general and administrative expenses, but many of these expenditures will occur irrespective of our actions due to contractually committed activities and/or payments.
Management may be able to control the timing and level of research and development and selling, general and administrative expenses, 62 Table of Contents but many of these expenditures will occur irrespective of our actions due to contractually committed activities and/or payments.
Actual results, and future changes in estimates, may differ substantially from our current estimates. Interest Expense and Royalty Financing Obligations The royalty financing obligations are eligible to be repaid based on royalties from net sales of ORLADEYO and BCX10013.
Actual results, and future changes in estimates, may differ substantially from our current estimates. 72 Table of Contents Interest Expense and Royalty Financing Obligations The royalty financing obligations are eligible to be repaid based on royalties from net sales of ORLADEYO and BCX10013.
Research and development expenses include, among other items, personnel costs, including salaries and benefits, manufacturing costs, clinical, regulatory, and toxicology services performed by CROs, materials and supplies, and overhead allocations consisting of various administrative and facilities related costs, as well as termination fees and other commitments associated with discontinued programs.
Research and Development Expenses and Related Accruals Research and development expenses include, among other items, personnel costs, including salaries and benefits, manufacturing costs, clinical, regulatory, and toxicology services performed by clinical research organizations (“CROs), materials and supplies, and overhead allocations consisting of various administrative and facilities related costs, as well as termination fees and other commitments associated with discontinued programs.
R&D expenses vary according to the number of programs in clinical development and the stage of development of our clinical programs. Later stage clinical programs tend to cost more than earlier stage programs due to the longer length of time of the clinical trials and the higher number of patients enrolled in these clinical trials.
Research and development expenses vary according to the number of programs in clinical development and the stage of development of our clinical programs. Later stage clinical programs tend to cost more than earlier stage programs due to the longer length of time of the clinical trials and the higher number of patients enrolled in these clinical trials.
We plan to finance our needs principally from the following: • lease, royalty, or loan financing; • public or private equity and/or debt financing; • our existing capital resources and interest earned on that capital; • revenues from product sales; and • payments under current or future collaborative and licensing agreements with corporate partners.
In the future, we may finance our needs principally from the following: • our existing capital resources and interest earned on that capital; • revenues from product sales; • payments under current or future collaborative and licensing agreements with corporate partners; • lease, royalty, or loan financing; and • public or private equity and/or debt financing.
Examples of estimated accrued expenses include (i) fees paid to clinical research organizations (“CROs”) in connection with preclinical and toxicology studies and clinical trials; (ii) fees paid to investigative sites in connection with clinical trials; (iii) fees paid to contract manufacturers in connection with the production of our raw materials, drug substance, drug products, and product candidates; and (iv) professional fees.
Examples of estimated accrued research and development expenses include (i) fees paid to CROs in connection with preclinical and toxicology studies and clinical trials; (ii) fees paid to investigative sites in connection with clinical trials; (iii) fees paid to contract manufacturers in connection with the production of our raw materials, drug substance, drug products, and product candidates; and (iv) professional fees.
See Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the SEC on February 28, 2022, for a summary of our results of operations for the fiscal year ended December 31, 2020.
See Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on February 27, 2023, for a summary of our results of operations for the fiscal year ended December 31, 2021.
We value our inventories at the lower of cost or estimated net realizable value. We determine the cost of our inventories, which includes amounts related to materials, labor, manufacturing overhead and shipping and handling costs on a first-in, first-out (FIFO) basis.
Additionally, our inventory includes RAPIVAB and peramivir. We value our inventories at the lower of cost or estimated net realizable value. We determine the cost of our inventories, which includes amounts related to materials, labor, manufacturing overhead and shipping and handling costs on a first-in, first-out (FIFO) basis.
Direct expenses consist of compensation for R&D personnel and costs of outside parties to conduct laboratory studies, develop manufacturing processes, manufacture the product candidates, and conduct and manage clinical trials, as well as other costs related to our clinical and preclinical studies.
Direct expenses consist of compensation for research and development personnel and costs of outside parties to conduct laboratory studies, develop manufacturing processes, manufacture the product candidates, and conduct and manage clinical trials, as well as other costs related to our clinical and preclinical studies.
Direct expenses consist of compensation for R&D personnel and costs of outside parties to conduct laboratory studies, develop manufacturing processes and manufacture the product candidate, conduct and manage clinical trials, as well as other costs related to our clinical and preclinical studies.
Direct expenses consist of compensation for research and development personnel and costs of outside parties to conduct laboratory studies, develop manufacturing processes and manufacture the product candidate, conduct and manage clinical trials, as well as other costs related to our clinical and preclinical studies.
Based on proprietary analyses of HAE prevalence and market research studies with HAE patients, physicians, and 52 Table of Contents payors in the United States and Europe, and two full years of commercialization experience with ORLADEYO in 2021 and 2022, we anticipate the global commercial market for ORLADEYO has the potential to reach a global peak of $1 billion in annual net ORLADEYO revenues.
Based on proprietary analyses of HAE prevalence and market research studies with HAE patients, physicians, and payors in the United States and Europe, and three full years of commercialization experience with ORLADEYO, we anticipate the global commercial market for ORLADEYO has the potential to reach a global peak of $1 billion in annual 61 Table of Contents net ORLADEYO revenues.
We may incur additional expenses related to the filing, prosecution, maintenance, defense, and enforcement of patent and other intellectual property claims and additional regulatory costs as our clinical programs advance through later stages of development.
We may incur additional expenses related to the filing, prosecution, maintenance, defense, and enforcement of patent and other intellectual property claims and additional regulatory costs as our clinical programs advance through later stages of development or as regulatory exclusivity for our products expires.
We expect to incur additional expenses, potentially resulting in significant losses, as we 57 Table of Contents continue to pursue our research and development activities, commercialize ORLADEYO, and hire additional personnel.
We expect to incur additional expenses, potentially resulting in significant losses, as we continue to pursue our research and development activities, commercialize ORLADEYO, and hire additional personnel.
In addition, RPI and OMERS are entitled to receive a tiered revenue share on amounts generally received by us on account of ORLADEYO sublicense revenue or net sales by licensees outside of the Key Territories. We will be required to make payments to OMERS commencing with the calendar quarter beginning October 1, 2023.
In addition, RPI and OMERS are entitled to receive a tiered revenue share on amounts generally received by us on account of ORLADEYO sublicense revenue or net sales by licensees outside of the Key Territories. Our required payments to OMERS commenced with the calendar quarter beginning October 1, 2023.
The specialty pharmacy, in turn, 60 Table of Contents charges back to us the difference between the price the specialty pharmacy paid and the negotiated price paid by the contracted customers, which may be higher or lower than the specialty pharmacy purchase price with us.
The specialty pharmacy, in turn, charges back to us the difference between the price the specialty pharmacy paid and the negotiated price paid by the contracted customers, which may be higher or lower than the specialty pharmacy’s purchase price with us.
Government funding of our programs, including obtaining procurement contracts. We may issue securities, including common stock, preferred stock, depositary shares, purchase contracts, warrants, debt securities, and units, through private placement transactions or registered public offerings.
Government funding of our programs, including obtaining procurement contracts. We may, in the future, 67 Table of Contents issue securities, including common stock, preferred stock, depositary shares, purchase contracts, warrants, debt securities, and units, through private placement transactions or registered public offerings.
Revenue from sales of ORLADEYO in 2022, which was our second full year of ORLADEYO sales, is discussed under “Results of Operations” in this MD&A.
Revenue from sales of ORLADEYO in 2023, which was our third full year of ORLADEYO sales, is discussed under “Results of Operations” in this MD&A.
The estimation of share-based payment awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from our current estimates, such amounts will be recorded as a cumulative adjustment in the period estimates are revised.
We reduce stock-based compensation expense for estimated forfeitures. The estimation of share-based payment awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from our current estimates, such amounts will be recorded as a cumulative adjustment in the period estimates are revised.
During the quarter ended December 31, 2022, we evaluated our inventory levels and associated expiration dating relative to the latest sales forecasts for ORLADEYO and RAPIVAB and estimated those inventories at risk of obsolescence. Accordingly, we recorded an increase to the inventory valuation reserve of $0.9 million for a total reserve of $1.2 million as of December 31, 2022.
During the year ended December 31, 2023, we evaluated our inventory levels and associated expiration dating relative to the latest sales forecasts for ORLADEYO, RAPIVAB, and peramivir and estimated those inventories at risk of obsolescence. Accordingly, we recorded an increase to the inventory valuation reserve of $0.4 million for a total reserve of $1.6 million as of December 31, 2023.
Liquidity and Capital Resources Our operations have principally been funded through public offerings and private placements of equity securities; cash from collaborative and other research and development agreements, including U.S. Government contracts for RAPIVAB and galidesivir; our credit facilities; and the Royalty Sales.
Liquidity and Capital Resources Our operations have principally been funded through public offerings and private placements of equity securities; our credit facilities; revenues from ORLADEYO; royalty financing transactions; and cash from collaborative and other research and development agreements, including U.S. Government contracts.
If actual results in the future vary from estimates, we adjust these estimates, which would affect net product revenue and earnings in the period such variances become known. Government and Managed Care Rebates .
Actual amounts of consideration ultimately received may differ from our estimates. If actual results in the future vary from estimates, we adjust these estimates, which would affect net product revenue and earnings in the period such variances become known. Government and Managed Care Rebates .
A significant increase or decrease in forecasted net sales could materially impact each of the liability balances, interest expense and the time periods for repayment.
A significant increase or decrease in forecasted net sales could materially impact each of the liability balances, interest expense and the time periods for repayment. Income Taxes The liability method is used in our accounting for income taxes.
The amount of variable consideration included in the transaction price may be constrained and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts of consideration ultimately received may differ from our estimates.
The amount of variable consideration included in the transaction price may be constrained and is included in the 69 Table of Contents net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period.
For ORLADEYO, we classify payments to our specialty pharmacy customer for certain services provided by our customer as selling, general and administrative expenses to the extent such services provided are determined to be distinct from the sale of our product.
We recognize revenue for sales when our customers obtain control of the product, which generally occurs upon delivery. For ORLADEYO, we classify payments to our specialty pharmacy customer for certain services provided by our customer as selling, general and administrative expenses to the extent such services provided are determined to be distinct from the sale of our product.
As of December 31, 2022, we had net working capital of $411.0 million, a decrease of approximately $51.4 million from $462.4 million at December 31, 2021.
As of December 31, 2023, we had net working capital of $346.0 million, a decrease of approximately $65.0 million from $411.0 million at December 31, 2022.
This accrual process involves reviewing open contracts and purchase orders, communicating with our applicable personnel to identify services that have been performed and estimating the level of service performed and the associated cost when we have not yet been invoiced or otherwise notified of actual cost. The majority of our service providers invoice us monthly in arrears for services performed.
This process involves reviewing open contracts and purchase orders, communicating with our personnel and third-party vendors to identify services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of actual cost.
We may be required to raise additional capital to complete the development and commercialization of our current products and product candidates, and we may seek to raise capital in the future, including to take advantage of favorable opportunities in the capital markets. Additional funding may not be available when needed or in the form or on terms acceptable to us.
We may, in the future, be required to raise additional capital to complete the development and commercialization of our products and product candidates, and we may seek to raise capital in the future, including to take advantage of favorable opportunities in the capital markets.
In addition, we have previously received funding from other sources, including other collaborative and other research and development agreements, government grants, the PhaRMA Notes financing, equipment lease financing, facility leases, research grants, and interest income on our investments. In 2020 and 2021, we entered into the Royalty Purchase Agreements with RPI and OMERS.
In addition to the above, we have previously received funding from other sources, including other collaborative and other research and development agreements, government grants, equipment lease financing, facility leases, research grants, and interest income on our investments.
Our principal sources of liquidity at December 31, 2022 were approximately $304.8 million in cash and cash equivalents and approximately $119.5 million in investments considered available-for-sale.
Our principal sources of liquidity at December 31, 2023 were approximately $110.6 million in cash and cash equivalents and approximately $278.3 million in investments considered available-for-sale.
Royalties are recognized at the later of when (i) the subsequent sale or usage occurs; or (ii) the performance obligation to which some or all of the sales-based or usage-based royalty has been satisfied. Inventory Our inventories primarily relate to ORLADEYO. Additionally, our inventory includes RAPIVAB and peramivir.
Under certain of our license agreements, we receive royalty payments based upon our licensees’ net sales of covered products. Royalties are recognized at the later of when (i) the subsequent sale or usage occurs; or (ii) the performance obligation to which some or all of the sales-based or usage-based royalty has been satisfied. Inventory Our inventories primarily relate to ORLADEYO.
Because of the nature of the judgments and assumptions made by management, actual results could differ from these judgments and estimates, which could have a material impact on the carrying values of assets and liabilities and the results of operations. 59 Table of Contents While our significant accounting policies are more fully described in “Note 1—Significant Accounting Policies and Concentrations of Risk” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this report, we believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating our reported financial results and affect the more significant judgments and estimates that we use in the preparation of our financial statements.
While our significant accounting policies are more fully described in “Note 1—Significant Accounting Policies and Concentrations of Risk” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this report, we believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating our reported financial results and affect the more significant judgments and estimates that we use in the preparation of our financial statements.
The restrictive covenants contained in our Credit Agreement could cause us to be unable to pursue business opportunities that we or our stockholders may consider beneficial without the lender’s permission or without repaying all obligations outstanding under the Credit Agreement.
These covenants could cause us to be unable to pursue business opportunities that we or our stockholders may consider beneficial without the lenders’ permission or without repaying all obligations outstanding under the Pharmakon Loan Agreement. A breach of any of these covenants could result in an event of default under the Pharmakon Loan Agreement.
Direct expenses are charged directly to the program to which they relate, and indirect expenses are allocated based upon internal direct labor hours dedicated to each respective program.
Research and development expenses include all direct and indirect expenses and are allocated to specific programs at the point of development of a lead product candidate. Direct expenses are charged directly to the program to which they relate, and indirect expenses are allocated based upon internal direct labor hours dedicated to each respective program.
Additionally, we have license agreements with third parties, such as Albert Einstein College of Medicine of Yeshiva University (“AECOM”), Industrial Research, Ltd. (“IRL”), and the University of Alabama (“UAB”), which require fees related to sublicense agreements or maintenance fees.
Additionally, we have license agreements with third parties, such as Albert Einstein College of Medicine of Yeshiva University, Industrial Research, Ltd., and the University of Alabama at Birmingham (“UAB”), which require fees related to sublicense agreements. We expense sublicense payments as incurred. We group our research and development expenses into two major categories: direct external expenses and indirect expenses.
Product Sales, Net Our principal sources of product sales are sales of ORLADEYO, which we began shipping to patients in December 2020, sales of peramivir to our licensing partners and sales of RAPIVAB to the HHS under our procurement contract. In the United States, we ship ORLADEYO directly to patients through a single specialty pharmacy, which is considered our customer.
Product Sales, Net Our principal sources of product sales are sales of ORLADEYO, which we began shipping to patients in December 2020, sales of peramivir to our licensing partners, and in prior years, sales of RAPIVAB to HHS under our historical procurement contract, which was completed in 2022.
GAAP, which were utilized in the preparation of our consolidated financial statements. Certain accounting policies involve significant judgments and assumptions by management that have a material impact on the carrying value of certain assets and liabilities. Management considers such accounting policies to be critical accounting policies.
Certain accounting policies involve significant judgments and assumptions by management that have a material impact on the carrying value of certain assets and liabilities. Management considers such accounting policies to be critical accounting policies. The judgments and assumptions used by management are based on historical experience and other factors, which are believed to be reasonable under the circumstances.
ORLADEYO is approved in the United States and multiple global markets for the prevention of HAE attacks in adults and pediatric patients 12 years and older.
Products and Product Candidates ORLADEYO® (berotralstat) . ORLADEYO is an oral, once-daily therapy discovered and developed by us for the prevention of hereditary angioedema (“HAE”) attacks. ORLADEYO is approved in the United States and multiple global markets for the prevention of HAE attacks in adults and pediatric patients 12 years and older.
Interest expense for the year ended December 31, 2021 consisted of $37.7 million of non-cash interest expense due to the amortization of interest associated with the Royalty Financing Obligations and $15.5 million of interest expense, net of deferred financing amortization, associated with the Term A Loan under the Credit Agreement.
Interest expense for the year ended December 31, 2023 included $70.4 million of non-cash interest expense due to the amortization of interest associated with the royalty financing obligations, $28.0 million of interest expense, including the amortization of the deferred financing associated with the borrowings under the Pharmakon Loan Agreement, and $9.5 million of interest expense, net of deferred financing amortization, associated with the borrowings under the Athyrium Credit Agreement (as defined below).
For the year ended December 31, 2022, interest income earned on investments of $5.1 million was partially offset by foreign currency losses of $2.0 million.
For the year ended December 31, 2022, other income was comprised of interest income of $5.1 million, partially offset by net foreign currency losses of $2.0 million. For the year ended December 31, 2023, we incurred a tax expense of $0.3 million as compared to tax expense of $2.7 million for the year ended December 31, 2022.
Our primary sources of revenue from these collaborative and other research and development arrangements are license, service and royalty revenues.
Collaborative and Other Revenues We have collaboration and license agreements with a number of third parties as well as research and development agreements with certain government entities. Our primary sources of revenue from these collaborative and other research and development arrangements are license, service and royalty revenues.
This decrease was partially offset by increases in cost of product sales relative to the overall increase in ORLADEYO sales and the increase in RAPIVAB stockpiling sales to HHS for the year ended December 31, 2022.
The decrease in cost of product sales for the year ended December 31, 2023 was primarily associated with the peramivir product sales to our partners and the RAPIVAB stockpiling sales to HHS during the year ended December 31, 2022 that did not occur in 2023, partially offset by an increase in ORLADEYO sales in the current year period.
Any milestone payments received prior to satisfying these revenue recognition criteria are recorded as deferred revenue. Reimbursements received for direct out-of-pocket expenses related to research and development costs are recorded as revenue in the Consolidated Statements of Comprehensive Loss rather than as a reduction in expenses.
Reimbursements received for direct out-of-pocket expenses related to research and development costs are recorded as revenue in the Consolidated Statements of Comprehensive Loss rather than as a reduction in expenses. Under our historical contracts with BARDA/HHS and NIAID/HHS, revenue was recognized as reimbursable direct and indirect costs were incurred.
A breach of any of these covenants could result in an event of default under the Credit Agreement. As of December 31, 2022, we were in compliance with the covenants under the Credit Agreement. Critical Accounting Estimates We have established various accounting policies that govern the application of U.S.
As of December 31, 2023, we were in compliance with the negative covenants under the Pharmakon Loan Agreement. Critical Accounting Estimates We have established various accounting policies that govern the application of U.S. GAAP, which were utilized in the preparation of our consolidated financial statements.
Year Ended December 31, 2022 Compared to 2021 For the year ended December 31, 2022, total revenues were $270.8 million as compared to $157.2 million for the year ended December 31, 2021. This increase of $113.6 million was primarily due to an increase of $129.1 million of ORLADEYO net revenue, including royalties from sales in Japan through our partner Torii.
Year Ended December 31, 2023 Compared to 2022 For the year ended December 31, 2023, total revenues were $331.4 million as compared to $270.8 million for the year ended December 31, 2022. The increase was primarily due to ORLADEYO net revenue, including royalties, of 64 Table of Contents $326.0 million, an increase of $74.4 million.
See “Note 8—Royalty Monetizations—ORLADEYO and Factor D Inhibitors” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this report for additional information about these financing transactions. In 2020, we entered into our Credit Agreement with Athyrium Opportunities III Co-Invest 1 LP (“Athyrium” and such agreement, as subsequently amended, the “Credit Agreement”).
See “Note 8—Royalty Financing Obligations— 66 Table of Contents ORLADEYO and Factor D Inhibitors” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this report for additional information about these financing transactions.
Analyzing the arrangement to identify performance obligations requires the use of judgment, and each may be an obligation to deliver services, a right or license to use an asset, or another performance obligation. 61 Table of Contents Milestone payments are recognized as licensing revenue upon the achievement of specified milestones if (i) the milestone is substantive in nature and the achievement of the milestone was not probable at the inception of the agreement and (ii) we have a right to payment.
Milestone payments are recognized as licensing revenue upon the achievement of specified milestones if (i) the milestone is substantive in nature and the achievement of the milestone was not probable at the inception of the agreement and (ii) we have a right to payment. Any milestone payments received prior to satisfying these revenue recognition criteria are recorded as deferred revenue.
Our future working capital requirements, including the need for additional working capital, will largely be determined by the advancement of our portfolio of product candidates and the commercialization of ORLADEYO, as well as any future decisions regarding the future of the RAPIVAB program, including those relating to stockpiling procurement.
Additional funding may not be available when needed or in the form or on terms acceptable to us. Our future working capital requirements, including the need for additional working capital, will largely be determined by the advancement of our portfolio of product candidates and the commercialization of ORLADEYO.
Accordingly, certain costs necessary to discontinue and close out these development programs were expensed in the fourth quarter ended December 31, 2022. 55 Table of Contents The following table summarizes our R&D expenses for the periods indicated (amounts are in thousands). Certain prior period amounts have been reclassified for consistency with the current year presentation.
The following table summarizes our research and development expenses for the periods indicated (amounts are in thousands). Certain prior period amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the total research and development expenses.
On November 28, 2022, we announced that the Israeli Ministry of Health granted marketing authorization for ORLADEYO to prevent attacks of HAE in adults and pediatric patients 12 years of age and older in Israel.
On November 29, 2023, we announced that the National Administration of Drugs, Foods, and Medical Devices in Argentina granted approval for ORLADEYO for the prophylaxis of HAE attacks in adults and pediatric patients 12 years of age or older.
These costs apply to work on non-active product candidates and our discovery research efforts. 63 Table of Contents Stock-Based Compensation All share-based payments, including grants of stock option awards and restricted stock unit awards, are recognized in our Consolidated Statements of Comprehensive Loss based on their fair values.
As of December 31, 2023 and 2022, the carrying value of accrued expenses approximates their fair value due to their short-term settlement. Stock-Based Compensation All share-based payments, including grants of stock option awards and restricted stock unit awards, are recognized in our Consolidated Statements of Comprehensive Loss based on their fair values.
In the European Union, United Kingdom and elsewhere, we sell ORLADEYO to specialty distributors as well as hospitals and pharmacies, which collectively are considered our customers. We recognize revenue for sales when our customers obtain control of the product, which generally occurs upon delivery.
In the United States, we ship ORLADEYO directly to patients through a single specialty pharmacy, which is considered our customer. In the European Union, United Kingdom, Canada, Latin America, and elsewhere, we sell ORLADEYO to specialty distributors as well as hospitals and pharmacies, which collectively are considered our customers.
Complement Program . The goal of our overall complement program is to advance several compounds across multiple pathways in the complement system to treat many complement-mediated diseases. These compounds include BCX10013, which targets the alternative pathway of complement.
We are continuing to monitor and analyze this data as we continue to commercialize ORLADEYO. Complement Program . The goal of our overall complement program is to advance several first-in-class and/or best-in-class compounds across multiple pathways in the complement system to treat many complement-mediated diseases.
The impact of the ongoing COVID-19 pandemic on one or more of the foregoing factors could negatively affect our revenues, expenses, and cash utilization rate. Based on our expectations for revenue and operating expenses, we believe our financial resources will be sufficient to fund our operations for at least the next 12 months.
Based on our expectations for revenue and operating expenses, we believe our financial resources will be sufficient to fund our operations for at least the next 12 months, and we have no immediate intentions to access the capital markets or draw down additional debt available to us.
We make estimates of our accrued expenses as of each balance sheet date based on the facts and circumstances known to us. We periodically confirm the accuracy of our estimates with the service providers and make adjustments if necessary.
The majority of our service providers invoice us monthly in arrears for services performed. We periodically confirm the accuracy of our estimates with the service providers and make adjustments if necessary.
The quarter ended December 31, 2022 was the last PIK eligible period. Accordingly, we are obligated to make quarterly interest payments on the outstanding principal of the Term Loans as of December 31, 2022. See “Note 9—Debt—Credit Agreement” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this report for additional information about the Credit Agreement.
See “Note 9—Debt—Pharmakon Loan Agreement” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this report for additional information about our obligations under the Pharmakon Loan Agreement.
Selling, general and administrative (“SG&A”) expenses for the year ended December 31, 2022 were $159.4 million compared to $118.8 million in the year ended December 31, 2021. The increase was primarily due to increased investment to support the U.S. commercial launch of ORLADEYO and the expansion of international operations.
Selling, general and administrative expenses for the year ended December 31, 2023 were $213.9 million compared to $159.4 million in the year ended December 31, 2022.
In addition, we are pursuing oral medicines directed at other targets across the classical, lectin, and terminal pathways of the complement system, including C2, a critical upstream serine protease enzyme for activation of the classical and lectin pathways. We have developed potent, selective molecules targeting C2, which are currently in lead optimization. RAPIVAB®/RAPIACTA®/PERAMIFLU® (peramivir injection) .
We are pursuing oral medicines and protein therapeutics directed at targets across the classical, lectin, and terminal pathways of the complement system. For more information on these therapies, see “Recent Developments” below in this MD&A. RAPIVAB®/RAPIACTA®/PERAMIFLU® (peramivir injection) .
Additionally, there was a reduction in contract revenue of $5.7 million in 2022 as a result of closing out our contracts with NIAID/HHS and BARDA/HHS for the development of galidesivir. Cost of product sales for the years ended December 31, 2022 and 2021 was $6.4 million and $7.2 million, respectively.
Cost of product sales for the years ended December 31, 2023 and 2022 was $4.5 million and $6.4 million, respectively.
We base our expenses related to clinical trials on our estimates of the services received and efforts expended pursuant to contracts with multiple research institutions and CROs that conduct and manage clinical trials on our behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows.
The financial terms of our agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. Payments under some of these contracts depend on factors such as the successful enrollment of patients and the completion of milestones.
By focusing on rare disease markets, we believe that we can more effectively control the costs of, and our strategic allocation of financial resources toward, post-approval commercialization. Products and Product Candidates ORLADEYO® (berotralstat) . ORLADEYO is an oral, once-daily therapy discovered and developed by us for the prevention of hereditary angioedema (“HAE”) attacks.
In addition to these discovery and development efforts, our business strategy includes the efficient commercialization of these drugs in the United States and certain other regions upon regulatory approval. By focusing on rare disease markets, we believe that we can more effectively control the costs of, and our strategic allocation of financial resources toward, post-approval commercialization.
Payments under some of these contracts depend on factors such as the successful enrollment of patients and the completion of clinical trial milestones. In accruing service fees, we estimate the time period over which services will be 62 Table of Contents performed and the level of effort expended in each period.
We record liabilities under these contractual commitments when we determine an obligation has been incurred, regardless of the timing of the invoice. In expensing service fees, we estimate the time period over which services will be performed and the level of effort expended in each period.
The decrease in working capital was primarily the result of general operations, partially offset by the $75.0 million proceeds received from the funding of the Term B Loan and Term C Loan in July 2022.
The decrease in working capital was primarily the result of normal operating expenses associated with the development of our product candidates and commercialization of ORLADEYO, partially offset by net proceeds of $25.8 million received following the funding of the Tranche A Loan of $300.0 million under the Pharmakon Loan Agreement.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe Term Loans under the Credit Agreement bear interest each quarter at a rate equal to the three-month London Interbank 64 Table of Contents Offered Rate (“LIBOR”), which is capped to be no less than 1.75% and no more than 3.50%, plus 8.25% or, for each quarterly interest period in which a PIK Interest Payment is made, the three-month LIBOR plus 10.25%.
Biggest changeThe Tranche A Loan under the Pharmakon Loan Agreement accrues interest each quarter at a rate equal to the three-month Secured Overnight Financing Rate (“SOFR”), which is capped to be no less than 1.75%, plus 7.00% or, for each quarterly interest period in which a Pharmakon PIK Interest Payment (as defined in “Note 9—Debt—Pharmakon Loan Agreement” in the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this report) is made, SOFR plus 7.25%.
A hypothetical 100 basis point increase or decrease in interest rates along the entire interest rate yield curve would not significantly affect the fair value of our interest sensitive financial instruments, including our borrowings, but may affect our future earnings and cash flows.
A hypothetical 100 basis point increase or decrease in interest rates along the entire interest rate yield curve would not significantly affect the fair value of our interest sensitive financial instruments, including our borrowings, but may affect 73 Table of Contents our future earnings and cash flows.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Interest Rate Risk We are subject to interest rate risk on our investment portfolio and borrowings under our Credit Agreement.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Interest Rate Risk We are subject to interest rate risk on our investment portfolio and borrowings under our Pharmakon Loan Agreement.
Foreign Currency Risk Most of our revenues and expenses are denominated in U.S. dollars. Our commercial sales in Europe are primarily denominated in Euros and the British Pound.
Foreign Currency Risk Most of our revenues and expenses are denominated in U.S. dollars. Our commercial sales in Europe are primarily denominated in Euros and the British Pound, and our royalties from Torii are in Japanese Yen.
We also had other transactions denominated in foreign currencies during the year ended December 31, 2022, primarily related to operations in Europe, contract manufacturing and ex-U.S. clinical trial activities, and we expect to continue to do so. Our royalties from Torii are derived from Torii’s sales of ORLADEYO in Japan.
We also had other transactions denominated in foreign currencies during the year ended December 31, 2023, primarily related to operations in Europe, contract manufacturing and ex-U.S. clinical trial activities, and we expect to continue to do so.
Additionally, we have initiated operations in Canada and have foreign currency exposure relative to the Canadian Dollar. We do not anticipate that foreign currency transaction gains or losses will be significant at our current level of operations. However, transaction gains or losses may become significant in the future as we continue to expand our 65 Table of Contents operations internationally.
We do not anticipate that foreign currency transaction gains or losses will be significant at our current level of operations. However, transaction gains or losses may become significant in the future as we continue to expand our operations internationally. We have not engaged in foreign currency hedging during 2023; however, we may do so in the future.
We do not believe that inflation has had a material impact on our business or results of operations during the periods for which the condensed consolidated financial statements are presented in this report. Significant adverse changes in inflation could negatively impact our future results of operations. 66 Table of Contents
Inflation Risk Inflation generally impacts us by potentially increasing our operating expenses, including cost of product sales, clinical trial costs and selling activities. We do not believe that inflation has had a material impact on our business or results of operations during the periods for which the consolidated financial statements are presented in this report.
Accordingly, increases in interest rates could increase the associated interest payments that we are required to make on the Term Loans. For the year ended December 31, 2022, interest was accrued at an effective interest rate of 12.87% on the $200.0 million borrowings under the Credit Agreement. The quarter ended December 31, 2022 was the last PIK eligible period.
Accordingly, increases in interest rates will increase the associated interest payments that we are required to make on the Tranche A Loan. For the year ended December 31, 2023, interest was accrued at an effective rate of 13.30% on the $300.0 million borrowing under the Pharmakon Loan Agreement. We invest in marketable securities in accordance with our investment policy.
Those sales are denominated in Japanese yen and converted into U.S. dollars for purposes of determining the royalty owed to us. Our limited foreign currency exposure relative to our European operations is to fluctuations in the Euro, British Pound, Swiss Franc, Danish Krone, and Swedish Krona.
Our limited foreign currency exposure relative to our European operations is to fluctuations in the Euro, British Pound, Swiss Franc, Danish Krone, Swedish Krona, and Norwegian Krone. Additionally, we have operations in Canada and have foreign currency exposure relative to the Canadian Dollar.
Removed
Accordingly, we are obligated to make quarterly interest payments on the outstanding principal of the Term Loans as of December 31, 2022. The three-month LIBOR was 4.73% as of December 28, 2022, the LIBOR measurement date for the three-month interest period beginning January 1, 2023.
Added
Significant adverse changes in inflation could negatively impact our future results of operations. 74 Table of Contents
Removed
As the three-month LIBOR rate exceeds the LIBOR cap of 3.50%, the 3.50% cap plus 8.25% will be used to record interest expense for the three-month interest period beginning January 1, 2023. In June 2023, LIBOR will be discontinued as a reference rate.
Removed
The Credit Agreement contains language allowing for the substitution, through an amendment, of a new benchmark rate, which may be the Secured Overnight Financing Rate (“SOFR”), in the event that LIBOR is no longer available. This transition is not expected to have a material impact on our financial statements. We invest in marketable securities in accordance with our investment policy.
Removed
We have not engaged in foreign currency hedging during 2022; however, we may do so in the future. Inflation Risk Inflation generally impacts us by potentially increasing our operating expenses, including clinical trial costs and selling activities.

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