UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
( X ) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 0R 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .
Commission File Number 000-23186
BIOCRYST PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 62-1413174
(State or other jurisdiction of (I.R.S. employer identification no.)
incorporation or organization)
2190 Parkway Lake Drive; Birmingham, Alabama
35244 (Address and zip code of principal
executive offices)
(205) 444-4600
(Registrant's telephone number, including area code)
NONE
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days:
Yes X No __
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 13,956,743 shares of the
Company's Common Stock, $.01 par value, were outstanding as of August 10, 1998.
BIOCRYST PHARMACEUTICALS, INC.
INDEX
Part I. Financial Information Page No.
--------
Item 1. Financial Statements:
Condensed Balance Sheets - June 30, 1998 and December 31, 1997 2
Condensed Statements of Operations - Three and Six Months Ended
June 30, 1998 and 1997 3
Condensed Statements of Cash Flows - Six Months Ended
June 30, 1998 and 1997 4
Notes to Condensed Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 5
Part II. Other Information
Item 1. Legal Proceedings 15
Item 2. Changes in Securities 15
Item 3. Defaults Upon Senior Securities 15
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 5. Other Information 16
Item 6. Exhibits and Reports on Form 8-K 16
Signatures 18
1
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
BIOCRYST PHARMACEUTICALS, INC.
CONDENSED BALANCE SHEETS
June 30, 1998 and December 31, 1997
(In thousands, except per share)
1998 1997
ASSETS (Unaudited) (Note 1)
Cash and cash equivalents $ 3,664 $ 3,757
Securities held-to-maturity 15,613 15,724
Prepaid expenses and other current assets 351 215
-------- --------
Total current assets 19,628 19,696
Securities held-to-maturity 5,163
Furniture and equipment, net 1,598 1,557
Patents 66 69
-------- --------
Total assets $ 21,292 $ 26,485
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 333 $ 245
Accrued expenses 509 307
Accrued taxes, other than income 141 166
Accrued vacation 114 90
Current maturities of capital lease obligations 26 58
-------- --------
Total current liabilities 1,123 866
Capital lease obligations 28 34
Deferred license fee 300 300
-------- --------
Total liabilities 1,451 1,200
-------- --------
Stockholders' equity:
Convertible preferred stock, $.01 par value, shares
authorized - 5,000; shares issued and outstanding - none
Common stock, $.01 par value, shares authorized -
45,000; shares issued and outstanding -
13,942 in 1998 and 13,818 in 1997 139 138
Additional paid-in capital 74,073 73,531
Accumulated deficit (54,371) (48,384)
-------- --------
Total stockholders' equity 19,841 25,285
-------- --------
Total liabilities and stockholders' equity $ 21,292 $ 26,485
-------- --------
-------- --------
See accompanying notes to condensed financial statements.
2
BIOCRYST PHARMACEUTICALS, INC.
CONDENSED STATEMENTS OF OPERATIONS
Periods Ended June 30, 1998 and 1997
(In thousands, except per share)
Three Months Six Months
1998 1997 1998 1997
Collaborative and other research and development $ $ 1,000 $ $ 1,000
Interest and other 289 427 671 879
------- -------- -------- -------
Revenues 289 1,427 671 1,879
------- -------- -------- -------
Research and development 2,611 2,521 5,353 5,431
General and administrative 654 974 1,295 1,647
Interest 5 12 10 30
------- -------- -------- -------
Expenses 3,270 3,507 6,658 7,108
------- -------- -------- -------
Net loss $(2,981) $(2,080) $(5,987) $(5,229)
------- -------- -------- -------
------- -------- -------- -------
Net loss per share (Note 2) $ (.21) $ (.15) $ (.43) $ (.38)
Weighted average shares outstanding (Note 2) 13,942 13,773 13,926 13,761
See accompanying notes to condensed financial statements.
3
BIOCRYST PHARMACEUTICALS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
Six Months Ended June 30, 1998 and 1997
(In thousands)
1998 1997
Operating activities
Net loss $(5,987) $(5,229)
Depreciation and amortization 299 315
Non-monetary compensation 25 76
Changes in operating assets and liabilities, net 156 29
------- -------
Net cash used by operating activities (5,507) (4,809)
------- -------
Investing activities
Purchases of furniture and equipment (340) (909)
Purchases of marketable securities (2,352) (2,271)
Maturities of marketable securities 7,626 8,892
------- -------
Net cash provided by investing activities 4,934 5,712
------- -------
Financing activities
Principal payments on debt and capital lease obligations (38) (175)
Proceeds of sale/leaseback 41
Proceeds from sale of common stock, net of issuance cost 518 274
------- -------
Net cash provided by financing activities 480 140
------- -------
(Decrease)/increase in cash and cash equivalents (93) 1,043
Cash and cash equivalents at beginning of period 3,757 3,636
------- -------
Cash and cash equivalents at end of period $ 3,664 $ 4,679
------- -------
------- -------
See accompanying notes to condensed financial statements.
4
BIOCRYST PHARMACEUTICALS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
Note 1. Basis of Preparation
The condensed balance sheet as of June 30, 1998 and the condensed statements of
operations and cash flows for the six months ended June 30, 1998 and 1997 have
been prepared in accordance with generally accepted accounting principles by the
Company and have not been audited. Such financial statements reflect all
adjustments which are, in management's opinion, necessary to present fairly, in
all material respects, the financial position at June 30, 1998 and the results
of operations and cash flows for the six months ended June 30, 1998 and 1997.
These condensed financial statements should be read in conjunction with the
financial statements for the year ended December 31, 1997 and the notes thereto
included in the Company's 1997 Annual Report. Interim operating results are not
necessarily indicative of operating results for the full year. The balance sheet
as of December 31, 1997 has been prepared from the audited financial statements
included in the previously mentioned Annual Report.
Note 2. Net Loss Per Share
Net loss per share is computed using the weighted average number of shares of
common stock outstanding. Common equivalent shares from unexercised stock
options and warrants are excluded from the computation as their effect is
anti-dilutive. Due to this anti-dilutive effect, implementation of Statement of
Financial Accounting Standards No. 128, Earnings per Share, issued February
1997, does not change the calculation of the Company's net loss per share.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
This Quarterly Report on Form 10-Q contains certain statements of a
forward-looking nature relating to future events or the future financial
performance of the Company. Such statements are only predictions and the
actual events or results may differ materially from the results discussed in
the forward-looking statements. Factors that could cause or contribute to
such differences include those discussed below as well as those discussed in
other filings made by the Company with the Securities and Exchange
Commission, including the Company's Annual Report on Form 10-K.
Overview
Since its inception in 1986, the Company has been engaged in research and
development activities (including drug discovery, manufacturing compounds,
conducting preclinical studies and clinical trials) and organizational efforts
(including recruiting its scientific and management personnel), establishing
laboratory facilities, engaging its Scientific Advisory Board and raising
capital. The Company has not received any revenue from the sale of
pharmaceutical products and does not expect to receive such revenues to a
significant extent for at least several years, if at all. The Company has
incurred operating losses since its inception. The Company expects to incur
significant additional operating losses over the next several years and expects
such losses to increase as the Company's research and development and clinical
trial efforts expand.
Results of Operations (three months ending June 30, 1998 compared to three
months ending June 30, 1997)
Revenues decreased 79.7% to $289,000 in the three months ended June 30, 1998
from $1,427,000 in the three months ended June 30, 1997. The decrease in 1998
was primarily due to the first milestone payment received in the second quarter
of 1997 from Torii Pharmaceutical Co., Ltd. ("Torii") versus none received in
1998 plus less interest income due to declining cash available for investment
from that available in 1997.
Research and development expenses increased 3.6% to $2,611,000 in the three
months ended June 30, 1998 from $2,521,000 in the three months ended June 30,
1997. Such expenses vary from period to period based on the status
5
of the Company's projects. The Company completed two Phase III clinical
trials in 1997. In 1998, the Company commenced two Phase I clinical trials
for its serine protease inhibitor, most of which was in the second quarter,
continued its three Phase I/II clinical trials for an oral formulation of its
PNP inhibitor and initiated preclinical studies for its influenza
neuraminidase and serine protease inhibitors in the first half of 1998.
Overall, the decline in costs associated with the Company's PNP inhibitor
project were offset by the advances in the Company's serine protease and
influenza neuraminidase projects. As a result, there was a slight increase
for the second quarter of 1998 in the outside research and development
efforts associated with the Company's three research and development projects.
General and administrative expenses decreased 32.9% to $654,000 in the three
months ended June 30, 1998 from $974,000 in the three months ended June 30,
1997. The decrease in 1998 was primarily due to the fees and taxes on the Torii
milestone payment received in the second quarter of 1997 versus none in the
second quarter of 1998.
Interest expense decreased 58.3% to $5,000 in the three months ended June 30,
1998 from $12,000 in the three months ended June 30, 1997. The decrease in 1998
was due to a decline in capitalized lease obligations, along with long-term
debt, resulting in lesser interest expense. The Company obtained most of its
leases in connection with the move to its new facilities in April 1992.
Results of Operations (six months ending June 30, 1998 compared to the six
months ending June 30, 1997)
Revenues decreased 64.3% to $671,000 in the first six months of 1998 from
$1,879,000 in the first six months of 1997. The decrease in 1998 was primarily
due to the first milestone payment received in the second quarter of 1997 from
Torii Pharmaceutical Co., Ltd. ("Torii") versus none received in 1998 plus less
interest income due to declining cash available for investment from that
available in 1997.
Research and development expenses decreased 1.4% to $5,353,000 in the first six
months of 1998 from $5,431,000 in the first six months of 1997. Such expenses
vary from period to period based on the status of the Company's projects. The
Company completed two Phase III clinical trials in 1997. In 1998, the Company
commenced two Phase I clinical trials for its serine protease inhibitor, most of
which was in the second quarter, continued its three Phase I/II clinical trials
for an oral formulation of its PNP inhibitor and initiated preclinical studies
for its influenza neuraminidase and serine protease inhibitors in the first half
of 1998. Overall, the decline in costs associated with the Company's PNP
inhibitor project were partially offset by the advances in the Company's serine
protease and influenza neuraminidase projects. As a result, there was a slight
decrease in 1998 in the outside research and development efforts associated with
the Company's three research and development projects.
General and administrative expenses decreased 21.4% to $1,295,000 in the first
six months of 1998 from $1,647,000 in the first six months of 1997. The decrease
in 1998 was primarily due to the fees and taxes on the Torii milestone payment
received in the second quarter of 1997.
Interest expense decreased 66.7% to $10,000 in the first six months of 1998 from
$30,000 in the first six months of 1997. The decrease in 1998 was due to a
decline in capitalized lease obligations, along with long-term debt, resulting
in lesser interest expense. The Company obtained most of its leases in
connection with the move to its new facilities in April 1992.
Liquidity and Capital Resources
Cash expenditures have exceeded revenues since the Company's inception.
Operations have principally been funded through public offerings of common
stock, private placements of equity and debt securities, equipment lease
financing, facility leases, collaborative and other research and development
agreements (including a license and options for licenses), research grants and
interest income. In addition, the Company has attempted to contain costs and
reduce cash flow requirements by renting scientific equipment or facilities,
contracting with third parties to conduct certain research and development and
using consultants. The Company expects to incur additional expenses, resulting
in significant losses, as it continues its research and development activities
and undertakes additional preclinical studies and clinical trials of compounds
which have been or may be discovered. The Company
6
also expects to incur substantial administrative, manufacturing and
commercialization expenditures in the future as it seeks Food and Drug
Administration (the "FDA") approval for its compounds and establishes its
manufacturing capability under good manufacturing practices ("GMP"), and
substantial expenses related to the filing, prosecution, maintenance, defense
and enforcement of patent and other intellectual property claims.
At June 30, 1998, the Company's cash, cash equivalents and securities
held-to-maturity were $19.3 million, a decrease of $5.4 million from December
31,1997 principally due to the net loss for the six months ended June 30, 1998
and the purchase of furniture and equipment, offset by the sale of common stock
under the Company's Stock Option and Employee Stock Purchase Plans.
The Company has financed its equipment purchases primarily with lease lines of
credit. The Company currently has a $500,000 line of credit with its bank to
finance capital equipment. In January 1992, the Company entered into an
operating lease for its current facilities which, based on an extension signed
in June 1998, expires on June 30, 2003, with an option to lease for an
additional three years at current market rates. The June 1998 extension also
added 3,210 square feet of finished office space. The operating lease requires
the Company to pay monthly rent (ranging from $21,405 and escalating annually to
a minimum of $24,814 per month in the final year), and a pro rata share of
operating expenses and real estate taxes in excess of base year amounts.
At December 31, 1997, the Company had long-term capital lease and operating
lease obligations which provide for aggregate minimum payments of $251,401 in
1998, $201,653 in 1999 and $127,610 in 2000. In 1997, the Company upgraded all
its personal computers and established a network using software packages that
are generally year 2000 compliant. Consequently, the Company does not anticipate
incurring additional significant costs to ensure that its operations will not be
adversely impacted by the year 2000 software problem.
The Company entered into an exclusive license agreement with Torii
Pharmaceutical Co., Ltd. ("Torii") under which Torii paid the Company $1.5
million in license fees and made a $1.5 million equity investment in the Company
in 1996. The first milestone payment of $1 million was received in 1997. While
the license agreement provides for potential milestone payments of up to an
additional $18 million and royalties on future sales of licensed products in
Japan, there can be no assurance that Torii will continue to develop the product
in Japan or, that if it does so, that it will result in meeting the milestones
or achieving future sales of licensed products in Japan.
The Company plans to finance its needs principally from its existing capital
resources and interest thereon, from payments under collaborative and licensing
agreements with corporate partners, through research grants, and to the extent
available, through lease or loan financing and future public or private
financings. The Company believes that its available funds will be sufficient to
fund the Company's operations at least for the next twelve months. However, this
is a forward-looking statement, and no assurance can be given that there will be
no change that would consume available resources significantly before such time.
The Company's future capital requirements will depend on many factors, including
continued scientific progress in its research, drug discovery and development
programs, the magnitude of these programs, progress with preclinical studies and
clinical trials, prosecuting and enforcing patent claims, competing
technological and market developments, changes in existing collaborative
research or development relationships, the ability of the Company to establish
additional collaborative relationships, and the cost of manufacturing scale-up
and effective marketing activities and arrangements. The Company anticipates,
based on its current business plan, that it will be necessary to raise
additional funds in 1999 or earlier. Additional funds, if any, may possibly be
raised through financing arrangements or collaborative relationships and/or the
issuance of preferred or common stock or convertible securities, on terms and
prices significantly more favorable than those of the currently outstanding
Common Stock, which could have the effect of diluting or adversely affecting the
holdings or rights of existing stockholders of the Company. In addition,
collaborative arrangements may require the Company to transfer certain material
rights to such corporate partners. If adequate funds are not available, the
Company will be required to delay, scale back or eliminate one or more of its
research, drug discovery or development programs or attempt to obtain funds
through arrangements with collaborative partners or others that may require the
Company to relinquish some or all of its rights to certain of its intellectual
property, product candidates or products.
7
Certain Factors That May Affect Future Results, Financial Condition and the
Market Price of Securities
Early Stage of Development; Uncertainty of Product Development; Technological
Uncertainty
BioCryst is at an early stage of development. All of the Company's compounds are
in research and development, and no revenues have been generated from sales of
its compounds. It will be a number of years, if ever, before the Company will
recognize significant revenues from product sales or royalties. To date, most of
the Company's resources have been dedicated to the research and development of
pharmaceutical compounds based upon its purine nucleoside phosphorylase ("PNP")
program for the treatment of T-cell proliferative diseases and disorders and for
the development of inhibitors of influenza neuraminidase and enzymes and
proteins involved in the complement cascade. The Company is conducting
preclinical studies with its influenza neuraminidase inhibitor and clinical
studies with its lead drugs, BCX-34 and BCX-1470, and results from these studies
may not support future human clinical testing or further development of the
compounds. Recently completed Phase III trials with a cream formulation of
BCX-34 for treatment of cutaneous T-cell lymphoma ("CTCL") and psoriasis and a
Phase I/II trial for a topical ointment treatment for psoriasis did not show
statistical efficacy. Accordingly, the Company has discontinued further
development of these topical formulations of BCX-34, but is continuing its oral
trials for BCX-34. T-cell proliferative diseases, as well as the other disease
indications the Company is studying, are highly complex and their causes are not
fully known. The Company's compounds under development will require significant
additional, time-consuming and costly research and development, preclinical
testing and extensive clinical testing prior to submission of any regulatory
application for commercial use. Product development of new pharmaceuticals is
highly uncertain, and unanticipated developments, clinical or regulatory delays,
unexpected adverse side effects or inadequate therapeutic efficacy could slow or
prevent product development efforts and have a material adverse effect on the
Company. One of BioCryst's lead drugs, BCX-34, reversibly inhibits T-cell
activity, an essential component of the human immune system. In addition to any
direct toxicities or side effects the drug may cause, BCX-34, while inhibiting
T-cells, may compromise the immune system's ability to fight infection. Although
the Company will monitor immunosuppression during drug dosing, there can be no
assurance that the drug will not cause irreversible immunosuppression. There can
be no assurance that the Company's research or product development efforts as to
any particular compound will be successfully completed, that the compounds
currently under development will be safe or efficacious, that required
regulatory approvals can be obtained, that products can be manufactured at
acceptable cost and with appropriate quality or that any approved products can
be successfully marketed or will be accepted by patients, health care providers
and third-party payors. Few drugs discovered by use of structure-based drug
design have been successfully developed, approved by the FDA or marketed. Within
the pharmaceutical industry, treatment of the disease indications being pursued
by the Company, especially T-cell proliferative diseases such as CTCL and
psoriasis, have proven difficult. There can be no assurance that drugs resulting
from the approach of structure-based drug design employed by the Company will
overcome the difficulties of drug discovery and development or result in
commercially successful products.
Uncertainty Associated with Preclinical and Clinical Testing
Before obtaining regulatory approvals for the commercial sale of any of its
products, BioCryst must undertake extensive preclinical and clinical testing to
demonstrate their safety and efficacy in humans. The Company has limited
experience in conducting clinical trials. To date, the Company has conducted
initial preclinical testing of certain of its compounds and is testing an oral
formulation of BCX-34 and an intravenous formulation of BCX-1470 in various
clinical trials. The results of initial preclinical and clinical testing of
compounds under development by the Company are neither necessarily predictive of
results that will be obtained from subsequent or more extensive preclinical and
clinical testing nor necessarily acceptable to the FDA to support applications
for marketing permits. However, the Company recently completed two Phase III
trials of a topical cream formulation and a Phase I/II trial of a topical
ointment formulation of BCX-34 which did not show statistical efficacy. Even if
the results of subsequent clinical tests are positive, products, if any,
resulting from the Company's research and development programs are not likely to
be commercially available for several years. Additionally, the Company has made
and may in the future make changes to the formulation of its drugs and/or to the
processes for manufacturing its drugs. Any such future changes in formulation or
manufacturing processes could result in delays in conducting further preclinical
and clinical testing, in unexpected adverse events in further preclinical and
clinical testing, and/or in additional development expenses. Furthermore, there
can be no assurance that clinical studies of products under
8
development will be acceptable to the FDA or demonstrate the safety and
efficacy of such products at all or to the extent necessary to obtain
regulatory approvals of such products. Companies in the industry have
suffered significant setbacks in advanced clinical trials, even after
promising results in earlier trials. The failure to comply with good clinical
practices requirements for data integrity or to adequately demonstrate the
safety and efficacy of a therapeutic product under development could delay or
prevent regulatory approval of the product, and would have a material adverse
effect on the Company.
The rate of completion of clinical trials is dependent upon, among other
factors, the rate of enrollment of patients. Patient accrual is a function of
many factors, including the size of the patient population, the proximity of
patients to clinical sites, the eligibility criteria for the study and the
existence of competitive clinical trials. Delays in planned patient
enrollment in the Company's current trials or future clinical trials may
result in increased costs and/or program delays which could have a material
adverse effect on the Company.
Government Regulation; No Assurance of Product Approval
The research, testing, manufacture, labeling, distribution, advertising,
marketing and sale of drug products are subject to extensive regulation by
governmental authorities in the United States and other countries. Prior to
marketing, compounds developed by the Company must undergo an extensive
regulatory approval process required by the FDA and by comparable agencies in
other countries. This process, which includes preclinical studies and
clinical trials of each compound to establish its safety and effectiveness
and confirmation by the FDA that good laboratory, clinical and manufacturing
practices were maintained during testing and manufacturing, can take many
years, requires the expenditure of substantial resources and gives larger
companies with greater financial resources a competitive advantage over the
Company. To date, no compound or drug candidate being evaluated by the
Company has been submitted for approval to the FDA or any other regulatory
authority for marketing, and there can be no assurance that any such compound
or drug candidate will ever be approved for marketing or that the Company
will be able to obtain the labeling claims desired for its compounds or drug
candidates. The Company is and will continue to be dependent upon the
laboratories and medical institutions conducting its preclinical studies and
clinical trials to maintain both good laboratory and good clinical practices
and, except for the formulating and packaging of small quantities of its drug
formulations which the Company is currently undertaking, upon the
manufacturers of its compounds to maintain compliance with current GMP
requirements. Data obtained from preclinical studies and clinical trials are
subject to varying interpretations which could delay, limit or prevent FDA
regulatory approval. Delays or rejections may be encountered based upon
changes in FDA policy for drug approval during the period of development and
FDA regulatory review. Similar delays also may be encountered in foreign
countries. Moreover, even if approval is granted, such approval may entail
commercially unacceptable limitations on the labeling claims for which a
compound may be marketed. Even if such regulatory approval is obtained, a
marketed drug or compound and its manufacturer are subject to continual
review and inspection, and later discovery of previously unknown problems
with the product or manufacturer may result in restrictions or sanctions on
such product or manufacturer, including withdrawal of the product from the
market, and other enforcement actions.
In June 1995 the Company notified the FDA that it had submitted incorrect
efficacy data to the FDA pertaining to its Phase II dose-ranging studies of
BCX-34 for CTCL and psoriasis. The FDA inspected the Company in November 1995 in
relation to a study involving the topical application of BCX-34 concluded in
early 1995, and in June 1996 the FDA inspected the Company and one of its
clinical sites in relation to a Phase II dose-ranging study of BCX-34 for CTCL
and a Phase II dose ranging study for psoriasis, both of which were concluded in
early 1995. After each inspection, the FDA issued to the Company a List of
Inspectional Observations ("Form FDA 483") setting forth certain deficient Good
Clinical Practices procedures followed by the Company, some of which resulted in
submission to the FDA of efficacy data which reported false statistical
significance. The FDA also issued a Form FDA 483 to the principal investigator
at one of the Company's clinical sites citing numerous significant deficiencies
in the conduct of the Phase II dose-ranging studies of BCX-34 for CTCL and
psoriasis. These deficiencies included improper delegations of authority by the
principal investigator, failures to follow the protocols, institutional review
board deviations, and discrepancies or deficiencies in documentation and
reporting. As a consequence of the FDA inspections and such resulting Form FDA
483s, the Company's ongoing clinical studies are likely to receive increased
scrutiny since the same clinical site which received the Form FDA 483 is
involved in the Company's oral trials; this may delay the regulatory review
process or require the Company to increase the number of patients at
9
other sites to obtain approval (which can not be assured on a timely basis or
at all). The Company has adjusted certain of its procedures, but there can be
no assurance that the FDA will find such adjustments to be in compliance with
FDA requirements or that, even if it does find such adjustments to be in
compliance, it will not seek to impose administrative, civil or other
sanctions in connection with the earlier studies. Administrative sanctions
could include refusing to accept earlier studies and requiring the Company to
repeat one or more clinical studies, which would be the only studies the FDA
would accept for purposes of substantive scientific review of any New Drug
Application by the agency.
Such sanctions or other government regulation may delay or prevent the marketing
of products being developed by the Company, impose costly procedures upon the
Company's activities and confer a competitive advantage to larger companies or
companies that are more experienced in regulatory affairs and that compete with
the Company. There can be no assurance that FDA or other regulatory approval for
any products developed by the Company will be granted on a timely basis, or at
all. Delay in obtaining or failure to obtain such regulatory approvals will
materially adversely affect the marketing of any products which may be developed
by the Company, as well as the Company's results of operations.
History of Operating Losses; Accumulated Deficit; Uncertainty of Future
Profitability
BioCryst, to date, has generated no revenue from product sales and has incurred
losses since its inception. As of June 30, 1998, the Company's accumulated
deficit was approximately $54.4 million. Losses have resulted principally from
costs incurred in research activities aimed at discovering, designing and
developing the Company's pharmaceutical product candidates and from general and
administrative costs. These costs have exceeded the Company's revenues, which to
date have been generated primarily from collaborative arrangements, licenses,
research grants and from interest income. The Company expects to incur
significant additional operating losses over the next several years and expects
such losses to increase as the Company's research and development and clinical
trial efforts continue. The Company's ability to achieve profitability depends
upon its ability to develop drugs and to obtain regulatory approval for its
products that may be developed, to enter into agreements for product
development, manufacturing and commercialization, and to develop the capacity to
manufacture, market and sell its products. There can be no assurance that the
Company will ever achieve significant revenues or profitable operations.
Additional Financing Requirements; Uncertainty of Additional Funding
The Company has incurred negative cash flows from operations in each year since
its inception. The Company expects that the funding requirements for its
operating activities will increase substantially in the future due to continued
research and development activities (including preclinical studies and clinical
trials), the development of manufacturing capabilities and the development of
marketing and distribution capabilities. The Company anticipates that its
capital resources are adequate to satisfy its capital requirements at least for
the next twelve months. However, this is a forward-looking statement, and no
assurance can be given that there will be no change that would consume available
resources significantly before such time. The Company's future capital
requirements will depend on many factors, including continued scientific
progress in its research, drug discovery and development programs, the magnitude
of these programs, progress with preclinical studies and clinical trials,
prosecuting and enforcing patent claims, competing technological and market
developments, changes in existing collaborative research or development
relationships, the ability of the Company to establish additional collaborative
relationships, and the cost of manufacturing scale-up and effective marketing
activities and arrangements. The Company anticipates, based on its current
business plan, that it will be necessary to raise additional funds in 1999 or
earlier. Additional funds, if any, may possibly be raised through financing
arrangements or collaborative relationships and/or the issuance of preferred or
common stock or convertible securities, on terms and prices significantly more
favorable than those of the currently outstanding Common Stock, which could have
the effect of diluting or adversely affecting the holdings or rights of existing
stockholders of the Company. In addition, collaborative arrangements may require
the Company to transfer certain material rights to such corporate partners. If
adequate funds are not available, the Company will be required to delay, scale
back or eliminate one or more of its research, drug discovery or development
programs or attempt to obtain funds through arrangements with collaborative
partners or others that may require the Company to relinquish some or all of its
rights to certain of its
10
intellectual property, product candidates or products. No assurance can be
given that additional financing will be available to the Company on
acceptable terms, if at all.
Competition
The Company is engaged in the pharmaceutical industry, which is characterized by
extensive research efforts, rapid technological progress and intense
competition. There are many public and private companies, including well-known
pharmaceutical companies, chemical companies, specialized biotechnology
companies and academic institutions, engaged in developing synthetic
pharmaceuticals and biotechnological products for human therapeutic applications
that represent significant competition to the Company. Existing products and
therapies and improvements thereto will compete directly with products the
Company is seeking to develop and market, and the Company is aware that other
companies or institutions are pursuing development of new drugs and technologies
directly targeted at applications for which the Company is developing its drug
compounds. Many of the Company's competitors have substantially greater
financial and technical resources and production and marketing capabilities and
experience than does the Company. The Company has granted Novartis
Pharmaceuticals Corporation, formerly Ciba-Geigy Corporation, ("Novartis"), a
worldwide exclusive license to several compounds in the Company's sixth group of
PNP inhibitors. Such arrangement with Novartis does not include BCX-34 or most
of the Company's other compounds. No assurance can be given that Novartis will
or will not develop compounds under such arrangements, will be able to obtain
FDA approval for any licensed compounds, that any such licensed compounds if so
approved will be able to be commercialized successfully, or that the Company
will realize any revenues pursuant to such arrangements. If commercialized,
these compounds could compete directly against other compounds, including
BCX-34, being developed by the Company.
Many of the Company's competitors have significantly greater experience in
conducting preclinical studies and clinical trials of new pharmaceutical
compounds and in obtaining FDA and other regulatory approvals for health care
products. Accordingly, BioCryst's competitors may succeed in obtaining approvals
for their drug candidates more rapidly than the Company and in developing
products that are safer or more effective or less costly than any that may be
developed by the Company and may also be more successful than the Company in the
production and marketing of such products. Many of the Company's competitors
also have current GMP facilities and significantly greater experience in
implementing GMP or in obtaining and maintaining the requisite regulatory
standards for manufacturing. Moreover, other technologies are, or may in the
future become, the basis for competitive products. Competition may increase
further as a result of the potential advances from structure-based drug design
and greater availability of capital for investment in this field. There can be
no assurance that the Company's competitors will not succeed in developing
technologies and products that are more effective than any being developed by
the Company or that would render the Company's technology and product candidates
obsolete or noncompetitive.
Dependence on Collaborative Partners; Relationship with The University of
Alabama at Birmingham ("UAB")
The Company's strategy for research, development and commercialization of
certain of its products is to rely in part upon various arrangements with
corporate partners, licensees and others. As a result, the Company's products
are dependent in large part upon the subsequent success of such third parties in
performing preclinical studies and clinical trials, obtaining regulatory
approvals, manufacturing and marketing. The Company entered into an exclusive
license agreement with Torii in May 1996 to develop, manufacture and
commercialize in Japan BCX-34 and certain other PNP inhibitor compounds for
three indications. The Company has also entered into collaborative arrangements
with 3-Dimensional Pharmaceuticals, Inc. to share resources and technology to
expedite the identification of inhibitors of key serine protease enzymes and
with Novartis to pursue development of certain types of PNP inhibitors. The
Company intends to pursue additional collaborations in the future. There can be
no assurance that the Company will be able to negotiate additional acceptable
collaborative arrangements or that such arrangements will be successful. No
assurance can be given that the Company's collaborative partners will be able to
obtain FDA approval for any licensed compounds, that any such licensed
compounds, if so approved, will be able to be commercialized successfully, or
that the Company will realize any revenues pursuant to such arrangements.
Although the Company believes that parties to collaborative arrangements
generally have an economic motivation to succeed in performing their contractual
responsibilities, the amount and timing of resources which they devote to these
activities are not within the control of the Company. There can be no assurance
that such parties will perform
11
their obligations as expected or that current or potential collaborators will
not pursue treatments for other diseases or seek alternative means of
developing treatments for the diseases targeted by collaborative programs
with the Company or that any additional revenues will be derived from such
arrangements. If any of the Company's collaborators breaches or terminates
its agreement with the Company or otherwise fails to conduct its
collaborative activities in a timely manner, the development or
commercialization of the product candidate or research program under such
collaboration agreement may be delayed, the Company may be required to
undertake unforeseen additional responsibilities or to devote unforeseen
additional resources to such development or commercialization, or such
development or commercialization could be terminated. The termination or
cancellation of collaborative arrangements could also adversely affect the
Company's financial condition, intellectual property position and operations.
In addition, disagreements between collaborators and the Company have in the
past and could in the future lead to delays in the collaborative research,
development or commercialization of certain product candidates, or could
require or result in legal process or arbitration for resolution. These
consequences could be time-consuming, expensive and could have material
adverse effects on the Company.
The successful commercialization of the Company's compounds and product
candidates is also dependent upon the Company's ability to develop
collaborative arrangements with academic institutions and consultants to
support research and development efforts and to conduct clinical trials. The
Company's primary academic collaboration is with UAB to support its ongoing
research and development programs and the termination or cessation of such
relationship could have a material adverse effect upon the Company. There can
be no assurance that the Company's current arrangements with UAB will
continue or that the Company will be able to develop successful collaborative
arrangements with academic institutions and consultants in the future.
Uncertainty of Protection of Patents and Proprietary Rights
The Company's success will depend in part on its ability to obtain and
enforce patent protection for its products, preserve its trade secrets, and
operate without infringing on the proprietary rights of third parties, both
in the United States and in other countries. In the absence of patent
protection, the Company's business may be adversely affected by competitors
who develop substantially equivalent technology. Because of the substantial
length of time and expense associated with bringing new products through
development and regulatory approval to the marketplace, the pharmaceutical
and biotechnology industries place considerable importance on obtaining and
maintaining patent and trade secret protection for new technologies, products
and processes. To date, the Company has been issued seven United States
patents related to its PNP inhibitor compounds. One of these compounds is
under a patent issued to Warner-Lambert and the Company may require a license
from Warner-Lambert to market a product containing this compound. The Company
has the right of first refusal to negotiate a license from Warner-Lambert for
that compound, however, there can be no assurance that such a license would
be available or obtainable on terms acceptable to the Company. A patent has
also been issued by the U.S. Patent and Trademark Office ("PTO") on a new
process to prepare BCX-34 and other PNP inhibitors and an additional patent
application has been filed for another new process to prepare BCX-34 and
other PNP inhibitors. In addition, two patent applications and a provisional
patent have been filed with the PTO relating to inhibitors of influenza
neuraminidase. Also, two provisional United States patent applications have
been filed with the PTO on complement inhibitors. The Company has filed
certain corresponding foreign patent applications and intends to file
additional foreign patent applications and additional United States patent
applications, as appropriate. There can be no assurance that patents will be
issued from such applications, that the Company will develop additional
products that are patentable or that present or future patents will provide
sufficient protection to the Company's present or future technologies,
products and processes. In addition, there can be no assurance that others
will not independently develop substantially equivalent proprietary
information, design around the Company's patents or obtain access to the
Company's know-how or that others will not successfully challenge the
validity of the Company's patents or be issued patents which may prevent the
sale of one or more of the Company's product candidates, or require licensing
and the payment of significant fees or royalties by the Company to third
parties in order to enable the Company to conduct its business. Legal
standards relating to the scope of claims and the validity of patents in the
fields in which the Company is pursuing research and development are still
evolving, are highly uncertain and involve complex legal and factual issues.
No assurance can be given as to the degree of protection or competitive
advantage any patents issued to the Company will afford, the validity of any
such patents or the Company's ability to avoid infringing any patents issued
to others. Further, there can be no guarantee that any patents issued to or
licensed by the Company will not be infringed by the products of others.
Litigation and other proceedings involving the defense and prosecution of
patent claims can be
12
expensive and time consuming, even in those instances in which the outcome is
favorable to the Company, and can result in the diversion of resources from
the Company's other activities. An adverse outcome could subject the Company
to significant liabilities to third parties, require the Company to obtain
licenses from third parties or require the Company to cease any related
research and development activities or sales.
The Company's success is also dependent upon the skills, knowledge and
experience (none of which is patentable) of its scientific and technical
personnel. To help protect its rights, the Company requires all employees,
consultants, advisors and collaborators to enter into confidentiality
agreements which prohibit the disclosure of confidential information to
anyone outside the Company and requires disclosure and assignment to the
Company of their ideas, developments, discoveries and inventions. There can
be no assurance, however, that these agreements will provide adequate
protection for the Company's trade secrets, know-how or other proprietary
information in the event of any unauthorized use or disclosure or the lawful
development by others of such information.
The Company's management and scientific personnel have been recruited
primarily from other pharmaceutical companies and academic institutions. In
many cases, these individuals are continuing research in the same areas with
which they were involved prior to joining BioCryst and may be restricted by
agreement from disclosing to the Company trade secrets they learned
elsewhere. As a result, the Company could be subject to allegations of
violation of such agreements and similar claims and litigation regarding such
claims could ensue.
Dependence on Key Management and Qualified Personnel
The Company is highly dependent upon the efforts of its senior management and
scientific team. The loss of the services of one or more members of the
senior management and scientific team could significantly impede the
achievement of development objectives. Although the Company maintains, and is
the beneficiary of, a $2 million key-man insurance policy on the life of
Charles E. Bugg, Ph.D., Chairman of the Board of Directors and Chief
Executive Officer, the Company does not believe the proceeds would be
adequate to compensate for his loss. Due to the specialized scientific nature
of the Company's business, the Company is also highly dependent upon its
ability to attract and retain qualified scientific, technical and key
management personnel. There is intense competition for qualified personnel in
the areas of the Company's activities, and there can be no assurance that the
Company will be able to continue to attract and retain qualified personnel
necessary for the development of its existing business and its expansion into
areas and activities requiring additional expertise, such as production and
marketing. The loss of, or failure to recruit, scientific, technical and
managerial personnel could have a material adverse effect on the Company. In
addition, the Company relies on members of its Scientific Advisory Board and
consultants to assist the Company in formulating its research and development
strategy. All of the members of the Scientific Advisory Board and all of the
Company's consultants are employed by other employers, and each such member
or consultant may have commitments to, or consulting or advisory contracts
with, other entities that may limit their availability to the Company.
Lack of Manufacturing, Marketing or Sales Capability
The Company has not yet manufactured or marketed any products and currently
does not have the facilities to manufacture its product candidates in
commercial quantities under GMP as prescribed and required by the FDA. To be
successful, the Company's products must be manufactured in commercial
quantities under GMP and at acceptable costs. Although the Company is
formulating and packaging under GMP conditions small amounts of certain drug
formulations which are the subject of preclinical studies and clinical
trials, the current facilities of the Company are not adequate for commercial
scale production. Therefore, the Company will need to develop its own GMP
manufacturing facility and/or depend on its collaborators, licensees or
contract manufacturers for the commercial manufacture of its products. The
Company has no experience in such commercial manufacturing and no assurance
can be given that the Company will be able to make the transition to
commercial production successfully or at an acceptable cost. In addition, no
assurance can be given that the Company will be able to make arrangements
with third parties to manufacture its products on acceptable terms, if at
all. The inability of the Company to manufacture or provide for the
manufacture of any products it may develop on a cost-effective basis
13
would have a material adverse effect on the Company.
The Company has no experience in marketing, distributing or selling
pharmaceutical products and will have to develop a pharmaceutical sales force
and/or rely on its collaborators, licensees or arrangements with others to
provide for the marketing, distribution and sales of any products it may
develop. There can be no assurance that the Company will be able to establish
marketing, distribution and sales capabilities or make arrangements with
collaborators, licensees or others to perform such activities.
Uncertainty of Third-Party Reimbursement and Product Pricing
Successful commercialization of any pharmaceutical products the Company may
develop will depend in part upon the availability of reimbursement or funding
from third-party health care payors such as government and private insurance
plans. There can be no assurance that third-party reimbursement or funding
will be available for newly approved pharmaceutical products or will permit
price levels sufficient to realize an appropriate return on the Company's
investment in its pharmaceutical product development. The U.S. Congress is
considering a number of legislative and regulatory reforms that may affect
companies engaged in the health care industry in the United States. Although
the Company cannot predict whether these proposals will be adopted or the
effects such proposals may have on its business, the existence and pendency
of such proposals could have a material adverse effect on the Company in
general. In addition, the Company's ability to commercialize potential
pharmaceutical products may be adversely affected to the extent that such
proposals have a material adverse effect on other companies that are
prospective collaborators with respect to any of the Company's pharmaceutical
product candidates. Third-party payors are continuing their efforts to
contain or reduce the cost of health care through various means. For example,
third-party payors are increasingly challenging the prices charged for
medical products and services. Also, the trend toward managed health care in
the United States and the concurrent growth of organizations, such as health
maintenance organizations, which can control or significantly influence the
purchase of health care services and products, as well as legislative
proposals to reform health care or reduce government insurance programs, may
result in lower prices for pharmaceutical products. The cost containment
measures that health care providers are instituting and the effect of any
health care reform could materially adversely affect the Company's ability to
sell its products if successfully developed and approved.
Risk of Product Liability; Availability of Insurance
The Company's business may be affected by potential product liability risks
which are inherent in the testing, manufacturing and marketing of
pharmaceutical and other products under development by the Company. There can
be no assurance that product liability claims will not be asserted against
the Company, its collaborators or licensees. The use of compounds or drug
candidates developed by the Company in clinical trials and the subsequent
sale of such products is likely to cause BioCryst to bear all or a portion of
those risks. The Company does not have product liability insurance but does
maintain coverage for clinical trials in the amount of $6 million per
occurrence and in the aggregate. No assurance can be given that such
insurance will be adequate to cover claims made with respect to the clinical
trials. There can be no assurance that the Company will be able to obtain or
maintain adequate product liability insurance on acceptable terms or that
such insurance will provide adequate coverage against potential liabilities.
Furthermore, there can be no assurance that any collaborators or licensees of
BioCryst will agree to indemnify the Company, be sufficiently insured or have
a net worth sufficient to satisfy any such product liability claims.
Hazardous Materials; Compliance with Environmental Regulations
The Company's research and development involves the controlled use of
hazardous materials, chemicals and various radioactive compounds. Although
the Company believes that its safety procedures for handling and disposing of
such materials comply with the standards prescribed by state and federal
regulations, the risk of accidental contamination or injury from these
materials cannot be completely eliminated. In the event of such an accident,
the Company could be held liable for any damages that result and any such
liability could exceed the resources of the Company. The Company may incur
substantial costs to comply with environmental regulations if the Company
develops manufacturing capacity.
14
Control by Existing Management and Stockholders; Effect of Certain
Anti-Takeover Considerations
The Company's directors, executive officers and certain principal
stockholders and their affiliates own beneficially approximately 30.8% of the
Common Stock. Accordingly, such holders, if acting together, may have the
ability to exert significant influence over the election of the Company's
Board of Directors and other matters submitted to the Company's stockholders
for approval. The voting power of these holders may discourage or prevent any
proposed takeover of the Company unless the terms thereof are approved by
such holders. Pursuant to the Company's Composite Certificate of
Incorporation (the "Certificate of Incorporation"), shares of Preferred Stock
may be issued by the Company in the future without stockholder approval and
upon such terms as the Board of Directors may determine. The rights of the
holders of Common Stock will be subject to, and may be adversely affected by,
the rights of the holders of any Preferred Stock that may be issued in the
future. The issuance of Preferred Stock could have the effect of discouraging
a third party from acquiring a majority of the outstanding Common Stock of
the Company and preventing stockholders from realizing a premium on their
shares. The Company's Certificate of Incorporation also provides for
staggered terms for the members of the Board of Directors. A staggered Board
of Directors and certain provisions of the Company's by-laws and of Delaware
law applicable to the Company could delay or make more difficult a merger,
tender offer or proxy contest involving the Company.
Price Volatility
The securities markets have from time to time experienced significant price
and volume fluctuations that have often been unrelated to the operating
performance of particular companies. In addition, the market prices of the
common stock of many publicly traded emerging pharmaceutical and
biopharmaceutical companies have in the past been, and can in the future be
expected to be, especially volatile. Announcements of technological
innovations or new products by the Company or its competitors, developments
or disputes concerning patents or proprietary rights or collaboration
partners, achieving or failing to achieve development milestones, publicity
regarding actual or potential medical results relating to products under
development by the Company or its competitors, regulatory developments in
both U.S. and foreign countries, public concern as to the safety of
pharmaceutical products and economic and other external factors, as well as
period-to-period fluctuations in the Company's financial results, may have a
significant impact on the market price of the Common Stock.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings:
None.
Item 2. Changes in Securities:
None
Item 3. Defaults Upon Senior Securities:
None
Item 4. Submission of Matters to a Vote of Security Holders:
(a) The Company's annual meeting of stockholders was held on
May 20, 1998.
(b) Messrs. Bugg, Montgomery and Gee were reelected as directors
for three-year terms expiring in 2001. Messrs. Bennett,
Featheringill, Horovitz, Rosenwald, Sherrill, Spencer and
Steer continue as directors.
15
(c) Motions before stockholders:
1. Election of three directors as follows -
Votes Abstentions/ Broker
Name Votes For Against Withheld Non-votes
Charles E. Bugg, Ph.D. 12,107,716 33,708 0 0
John A. Montgomery, Ph.D. 12,127,184 14,240 0 0
Edwin A. Gee, Ph.D. 12,108,116 33,308 0 0
(d) Not applicable.
Item 5. Other Information:
As disclosed in the Company's latest proxy statement, the deadline for
submitting proposals to be considered for inclusion in the Company's
Proxy Statement for the 1999 Annual Meeting is December 15, 1998.
In accordance with the recent amendment to Rule 14a-4(c)(1) under the
Securities Exchange Act of 1934, as amended, the Company will have
discretionary voting authority if a proponent does not notify the
Company by February 27, 1999 of their intent to present a proposal from
the floor at the 1999 Annual Meeting of Stockholders or of their intent
to commence a proxy solicitation for the 1999 Annual Meeting of
Stockholders.
Item 6. Exhibits and Reports on Form 8-K:
a. Exhibits:
Number Description
3.1 Composite Certificate of Incorporation of Registrant.
Incorporated by reference to Exhibit 3.1 to the Company's
Form 10-Q for the second quarter ending June 30, 1995 dated
August 11, 1995.
3.2 Bylaws of Registrant. Incorporated by reference to Exhibit
3.1 to the Company's Form 10-Q for the second quarter
ending June 30, 1995 dated August 11, 1995.
4.1 See Exhibits 3.1 and 3.2 for provisions of the Composite
Certificate of Incorporation and Bylaws of the Registrant
defining rights of holders of Common Stock of the
Registrant.
10.1 1991 Stock Option Plan, as amended and restated.
Incorporated by reference to Exhibit 99.1 to the Company's
Form S-8 Registration Statement (Registration No.
333-30751).
10.2 Form of Notice of Stock Option Grant and Stock Option
Agreement. Incorporated by reference to Exhibit 99.2 and
99.3 to the Company's Form S-8 Registration Statement
(Registration No. 33-95062).
10.3 Warehouse Lease dated January 17, 1992 between Principal
Mutual Life Insurance Company and the Registrant.
Incorporated by reference to Exhibit 10.21 to the
Company's Form S-1 Registration Statement (Registration
No. 33-73868).
10.4 Equipment Leases dated February 25, 1993, August 25, 1993,
and November 25, 1993 between Ventana Leasing, Inc. and
the Registrant. Incorporated by reference to Exhibit 10.23
to the Company's Form S-1 Registration Statement
(Registration No. 33-73868).
10.5 Common Stock Purchase Warrants issued in connection with
the issuance of Series A Convertible Preferred Stock.
Incorporated by reference to Exhibit 10.32 to the Company's
Form S-1 Registration Statement (Registration No.
33-73868).
10.6 Fourth Amended and Restated Registration Rights Agreement
among the Registrant and certain securityholders.
Incorporated by reference to Exhibit 10.35 to the Company's
Form S-1 Registration Statement (Registration No.
33-73868).
16
10.7 Common Stock Purchase Warrants issued in connection with
the issuance of Series B Convertible Preferred Stock.
Incorporated by reference to Exhibit 10.36 to the Company's
Form S-1 Registration Statement (Registration No.
33-73868).
10.8 Common Stock Purchase Warrants dated December 7, 1993 to
purchase 49,400 shares of Common Stock issued to each of
John Pappajohn, Lindsay A. Rosenwald and William M.
Spencer. Incorporated by reference to Exhibit 10.37 to the
Company's Form S-1 Registration Statement (Registration No.
33-73868).
10.9 Employment Agreement dated December 17, 1996 between the
Registrant and Charles E. Bugg, Ph.D. Incorporated by
reference to Exhibit 10.11 to the Company's Form 10-K for
the year ended December 31, 1996 dated March 28, 1997.
10.10 Employment Agreement dated December 18, 1996 between the
Registrant and J. Claude Bennett. Incorporated by reference
to Exhibit 10.12 to the Company's Form 10-K for the year
ended December 31, 1996 dated March 28, 1997.
10.11# License Agreement dated April 15, 1993 between Ciba-Geigy
Corporation (now merged into Novartis) and the Registrant.
Incorporated by reference to Exhibit 10.40 to the Company's
Form S-1 Registration Statement (Registration No.
33-73868).
10.12 Employee Stock Purchase Plan. Incorporated by reference to
Exhibit 99.4 to the Company's Form S-8 Registration
Statement (Registration No. 33-95062).
10.13 First Amendment to Lease Agreement between Registrant and
Principal Mutual Life Insurance Company, Inc. for
office/warehouse space. Incorporated by reference to
Exhibit 10.21 to the Company's Form 10-K for the year
ending December 31, 1994 dated March 28, 1995.
10.14 Form of Stock Purchase Agreement dated May 1995 between
Registrant and various parties to purchase 1,570,000 shares
of common stock. Incorporated by reference to Exhibit 10.22
to the Company's Form 10-Q for the second quarter ending
June 30, 1995 dated August 11, 1995.
10.15 Form of Registration Rights Agreement dated May 1995
between Registrant and various parties. Incorporated by
reference to Exhibit 10.23 to the Company's Form 10-Q for
the second quarter ending June 30, 1995 dated August 11,
1995.
10.16 Form of Stock Purchase Agreement dated March 22, 1996 among
Registrant and certain investors to purchase 1,000,000
shares of common stock. Incorporated by reference to
Exhibit 10.1 to the Company's Form 8-K dated March 22,
1996.
10.17 Form of Registration Rights Agreement dated March 22, 1996
among Registrant and certain investors. Incorporated by
reference to Exhibit 10.2 to the Company's Form 8-K dated
March 22, 1996.
10.18# License Agreement, dated May 31, 1996, between Registrant
and Torii Pharmaceutical Co., Ltd. ("Torii"). Incorporated
by reference to Exhibit 10.1 to the Company's Form 8-K/A
dated May 3, 1996 and filed August 2, 1996.
10.19# Stock Purchase Agreement, dated May 31, 1996, between
Registrant and Torii. Incorporated by reference to Exhibit
10.2 to the Company's Form 8-K/A dated May 3, 1996 and
filed August 2, 1996.
10.20 Second Amendment to Lease Agreement between Registrant and
Principal Mutual Life Insurance Company, Inc. for
office/warehouse space. Incorporated by reference to
Exhibit 10.24 to the Company's Form 10-Q for the first
quarter ending March 31, 1997 dated May 12, 1997.
10.21 Third Amendment to Lease Agreement between Registrant and
Principal Mutual Life Insurance Company, Inc. for
office/warehouse space. Incorporated by reference to
Exhibit 10.24 to the Company's Form 10-Q for the first
quarter ending March 31, 1998 dated April 29, 1998.
10.22 Fourth Amendment to Lease Agreement between Registrant and
Principal Mutual Life Insurance Company, Inc. for
office/warehouse space.
27.1 Financial Data Schedule.
- ----------
# Confidential treatment granted.
17
b. Reports on Form 8-K:
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BIOCRYST PHARMACEUTICALS, INC.
Date: August 12, 1998 /s/ Charles E. Bugg
--------------------------------------------
Charles E. Bugg
Chairman and Chief Executive Officer
Date: August 12, 1998 /s/ Ronald E. Gray
--------------------------------------------
Ronald E. Gray
Chief Financial Officer and Chief Accounting
Officer
18
Exhibit 10.22
STATE OF ALABAMA
SHELBY COUNTY
FOURTH AMENDMENT TO LEASE AGREEMENT
THIS FOURTH AMENDMENT TO LEASE AGREEMEPT, hereinafter referred to as
the "Agreement" is made and entered into on this 29th day of June 1998 by and
between PRINCIPAL MUTUAL LIFE INSURANCE COMPANY, hereinafter referred to as
"Lessor" and BIOCRYST PHARMACEUTICALS, INC., hereinafter referred to as
"Lessee";
WHEREAS, Lessor and Lessee, entered into a Lease Agreement, dated
January 17, 1992 and amended by the First Amendment to Lease Agreement dated
January 10, 1995 and amended by the Second Amendment to Lease Agreement dated
March 31, 1997, and amended by the Third Amendment to Lease Agreement dated
February 27, 1998, collectively referred to as the "Lease" for approximately
38,040 gross leasable square feet of office/warehouse space consisting of Suites
A and B and Suite C, collectively referred to as the "Premises", at the building
known as Riverchase Business Park, the "Building", located at 2190 and 2192
Parkway Lake Drive, Birmingham, Alabama 35244.
WHEREAS, the parties hereto have reached additional agreements to
amend the Lease in the manner hereafter set forth.
NOW, THEREFORE, for and in consideration of the mutual covenants and agreements
herein contained and other good and valuable considerations, the receipt and
sufficiency of which is hereby acknowledged, Lessor and Lessee understand and
agree as follows:
1. Lessee shall expand into 2192 Parkway Lake Drive, Suits A, the
"Expansion Area" consisting of approximately 3,210 gross leasable
square feet, which except for the rent specified in Paragraph Three
(3), will constitute part of the "Premises" under the Lease.
2. This agreement shall commence on July 15, 1998. The Lease shall expire
on June 30, 2003.
3. Monthly rent for the Expansion Area shall commence July 15, 1998 and
will be prorated for July. The July rent shall be $1,100.20. Normal
monthly rent occurring thereafter shall be $2,006.25, adjusting in the
month of April of each year as described in Paragraph Two (2) of the
First Amendment to Lease Agreement dated January 10, 1995.
4. Lessee agrees to take possession of the Expansion Area in its "as is"
condition. Lessor shall inspect and if necessary, service the HVAC
systems to insure that it is in good working condition.
5. Lessee's Base Year for Real Estate Taxes and Common Area Maintenance
costs, as described in Item 12 of the Lease Dated January 17, 1992,
shall be 1998.
6. Upon execution, Lessee shall deposit with the Lessor $5,900.00, to be
applied to the existing security deposit.
7. If Lessee elects to exercise its Right of First offer on Suits 2190-H
containing 1,700 sq. ft. by June 30, 1999 and Lessee and Lessor agree
to terms and conditions to Lease, the lease expiration of June 30,
2003 shall remain unchanged.
8. All other terms, covenants and conditions of the Lease shall remain
unchanged except as herein expressly changed and amended. In the event
the terms, covenants and condition of this Agreement differ from, or at
variance with, the terms of the Lease, the terms of this Agreement
shall prevail and take precedent.
19
IN WITNESS WHEREOF, the parties hereto have entered into this
Agreement as of the day and year first above written.
WITNESS: LESSOR: Principal Mutual Life Insurance Company
/s/Sharon K. Lane By: /s/ Steve W. Pick,
Assistant Director, Financial Reporting
By: /s/ David P. Ellingson,
Vice President and General Counsel
WITNESS: LESSEE: BioCryst Pharmaceuticals, Inc.
/s/Penelope L. Mann By: /s/ Ronald E. Gray, Chief Financial Officer
20
5
6-MOS
DEC-31-1998
JUN-30-1998
3,663,643
15,613,049
0
0
0
19,627,768
3,510,187
1,912,219
21,292,349
1,122,616
0
0
0
139,422
19,701,873
21,292,349
0
671,212
0
0
0
0
9,914
(5,986,634)
0
0
0
0
0
(5,986,634)
(.43)
(.43)