BIOCRYST PHARMACEUTICALS INC

Previous wording

The following Management’s Discussion and Analysis (“MD&A”) is intended to help the reader understand our results of operations and financial condition. MD&A is provided as a supplement to, and should be read in conjunction with, our unaudited condensed consolidated financial statements and the accompanying notes to the financial statements and other disclosures included in this report (including the“Cautionary Note Regarding Forward-Looking Statements” at the beginning of this report and the“Risk Factors” section in Part II, Item 1A of this report).

Current wording

The following Management’s Discussion and Analysis (“MD&A”) is intended to help the reader understand our results of operations and financial condition. This MD&A is provided as a supplement to, and should be read in conjunction with, our unaudited condensed consolidated financial statements and the accompanying notes to the financial statements and other disclosures included in this report (including the“Cautionary Note Regarding Forward-Looking Statements” at the beginning of this report and the“Risk Factors” section in Part II, Item 1A of this report).

Previous wording

We are a global biotechnology company with a deep commitment to improving the lives of people living with complement-mediated and other rare diseases. We leverage our expertise in structure-guided drug design with the goal of developing first-in-class or best-in-class oral small-molecule and protein therapeutics to target difficult-to-treat diseases. 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.

Current wording

We are a global biotechnology company with a deep commitment to improving the lives of people living with hereditary angioedema (“HAE”) and other rare diseases. We leverage our expertise in structure-guided drug design with the goal of developing first-in-class or best-in-class oral small-molecule and protein therapeutics to target difficult-to-treat diseases. 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.

Previous wording

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 other global markets for the prevention of HAE attacks in adults and pediatric patients 12 years and older. In addition, the ongoing APeX-P clinical trial is assessing an oral granule formulation of ORLADEYO in pediatric patients who are 2 to <12 years of age.

Current wording

ORLADEYO is an oral, once-daily therapy discovered and developed by us for the prevention of HAE attacks. ORLADEYO is approved in the United States and other global markets for the prevention of HAE attacks in adults and pediatric patients 12 years and older. In addition, the ongoing APeX-P clinical trial, which is complete through the primary endpoint, is continuing to assess an oral granule formulation of ORLADEYO in pediatric patients who are 2 to <12 years of age.

Previous wording

We have built out our U.S. commercial infrastructure to support the launch and continued commercialization of ORLADEYO in the United States and are continuing to build our commercial infrastructure to support launches in other markets. Based on proprietary analyses of HAE prevalence and market research studies with HAE patients, physicians, and payors in the United States and Europe, and more than three and a half 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 net ORLADEYO revenues. 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. 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. 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 II, Item 1A of this report for further discussion of these risks.

Current wording

We have built out our U.S. commercial infrastructure to support the launch and continued commercialization of ORLADEYO in the United States and are continuing to build our commercial infrastructure to support launches in other markets. Based on proprietary analyses of HAE prevalence and market research studies with HAE patients, physicians, and payors in the United States and Europe, and more than three and a half years of commercialization experience with ORLADEYO, we anticipate that the global commercial market for ORLADEYO has the potential to reach a global peak of $1 billion in annual net ORLADEYO revenues. 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. 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. 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 II, Item 1A of this report for further discussion of these risks.

Previous wording

Revenue from sales of ORLADEYO for the three and six months ended June 30, 2024 is discussed under “Results of Operations” in this MD&A. 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. We are continuing to monitor and analyze this data as we continue to commercialize ORLADEYO.

Current wording

Revenue from sales of ORLADEYO for the three and nine months ended September 30, 2024 is discussed under “Results of Operations” in this MD&A. 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. We monitor and analyze this data on an ongoing basis as we continue to commercialize ORLADEYO.

Previous wording

BCX17725 is a potent and selective investigational fusion protein KLK5 inhibitor designed to provide best-in-class, potentially disease-modifying treatment for people with Netherton syndrome. Netherton syndrome is a serious, rare, lifelong genetic disorder affecting the skin, hair, and immune system. People with Netherton syndrome often have red, scaly, inflamed skin, fragile hair, and are more likely to develop skin infections, allergies, asthma and eczema. Netherton syndrome can be life-threatening, especially during infancy when patients are vulnerable to dehydration and recurrent infections. Currently, there is no approved treatment for Netherton syndrome.

Current wording

BCX17725 is a potent and selective investigational protein therapeutic KLK5 inhibitor designed to provide best-in-class, potentially disease-modifying treatment for people with Netherton syndrome. Netherton syndrome is a serious, rare, lifelong genetic disorder affecting the skin, hair, and immune system, caused by lack of normal function of a natural inhibitor of KLK5. People with Netherton syndrome often have red, scaly, inflamed skin, fragile hair, and are more likely to develop skin infections, allergies, asthma and eczema. Netherton syndrome can be life-threatening, especially during infancy when patients are vulnerable to dehydration and recurrent infections. Currently, there are no approved treatments for Netherton syndrome.

Previous wording

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. We are pursuing oral medicines and protein therapeutics directed at targets across the classical, lectin, terminal, and alternative pathways of the complement system, including the therapies listed below.

Current wording

The goal of our overall complement program is to advance first-in-class and/or best-in-class compounds across multiple pathways in the complement system to treat complement-mediated diseases. We are pursuing oral medicines and protein therapeutics directed at targets across the classical, lectin, terminal, and alternative pathways of the complement system, including the therapies listed below.

Previous wording

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).

Current wording

RAPIVAB (peramivir injection) is approved in the United States for the treatment of acute uncomplicated influenza for patients six months and older. Since the 2009 H1N1 pandemic, RAPIVAB has been an important component of the U.S. Government’s influenza preparedness efforts. Peramivir injection is also approved in Canada (RAPIVAB), Australia (RAPIVAB), Japan (RAPIACTA), Taiwan (RAPIACTA), and Korea (PERAMIFLU).

Previous wording

On May 6, 2024, we announced that enrollment is complete in the APeX-P trial evaluating ORLADEYO in pediatric HAE patients who are 2 to <12 years of age. On August 5, 2024, we announced that we remain on track to submit a regulatory filing in 2025 to expand the ORLADEYO label to enable children as young as two years of age to receive an oral granule formulation of ORLADEYO. ORLADEYO would be the first oral prophylactic therapy for children with HAE.

Current wording

On August 5, 2024, we also announced that we remain on track to submit a regulatory filing in 2025 to expand the ORLADEYO label to enable children as young as two years of age to receive an oral granule formulation of ORLADEYO. ORLADEYO would be the first oral prophylactic therapy for children with HAE.

Previous wording

On May 9, 2024, we announced new real-world evidence on the use of ORLADEYO demonstrating that patients with HAE in the United States experience significant reductions in healthcare resource utilization after beginning treatment with ORLADEYO.

Current wording

On October 14, 2024, we announced new real-world evidence on the use of ORLADEYO demonstrating that patients with HAE in the United States experience significant reductions in healthcare resource utilization, including significant reductions in hospitalizations, emergency room visits and use of on-demand therapies, after beginning treatment with ORLADEYO.

Previous wording

On May 6, 2024, we announced that we expect to advance BCX17725 into the clinic by the end of 2024.

Current wording

On August 5, 2024, we reaffirmed that we expected to advance BCX17725 into the clinic by the end of 2024. On October 2, 2024, we announced the enrollment of the first participant in a Phase 1 trial evaluating BCX17725 for people with Netherton syndrome.

Previous wording

On May 6, 2024, we announced that we plan to advance avoralstat into a clinical trial of patients with DME in 2025.

Current wording

On August 5, 2024, we reaffirmed that we plan to advance avoralstat into a clinical trial of patients with DME in 2025.

Previous wording

On August 5, 2024, we announced that we have completed our clinical evaluation of BCX10013. The drug was safe and well tolerated at all doses studied; however, the level of clinical activity observed was less than other therapies on the market, and potential partners have declined to make the additional investment required to evaluate higher doses. We plan to discontinue development, consistent with our previously announced plans.

Current wording

On August 5, 2024, we announced that we completed our clinical evaluation of BCX10013. The drug was safe and well tolerated at all doses studied; however, the level of clinical activity observed was less than other therapies on the market, and potential partners have declined to make the additional investment required to evaluate higher doses. We plan to discontinue development, consistent with our previously announced plans.

Previous wording

For the three months ended June 30, 2024, total revenues were $109.3 million as compared to $82.5 million for the three months ended June 30, 2023. The increase in total revenues was due to a $27.3 million increase in ORLADEYO net revenue, including royalties. The increase in ORLADEYO net revenue was partially offset by a decrease in other net revenues of $0.4 million due to a decrease in royalties for sales of peramivir.

Current wording

For the three months ended September 30, 2024, total revenues were $117.1 million as compared to $86.7 million for the three months ended September 30, 2023. The increase in total revenues was due to a $30.6 million increase in ORLADEYO net revenue, including royalties, primarily due to an increase in direct sales of ORLADEYO.

Previous wording

Cost of product sales for the three months ended June 30, 2024 and 2023 was $1.7 million and $0.9 million, respectively. The increase in cost of product sales was primarily due to an increase in ORLADEYO sales in the current year period.

Current wording

Cost of product sales for the three months ended September 30, 2024 and 2023 was $3.2 million and $1.1 million, respectively. The increase in cost of product sales was primarily due to an increase in ORLADEYO sales and an increase in the inventory reserve in the current year period.

Previous wording

Research and development expenses decreased to $84.1 million for the six months ended June 30, 2024 from $99.6 million for the six months ended June 30, 2023, primarily due to a decrease in Factor D program expenses. The decrease in Factor D program expenses was primarily attributed to decreased spending on BCX10013 and the discontinuation of the BCX9930 program. These reductions to research and development expenses were partially offset by increased spending on berotralstat due to our ongoing ORLADEYO pediatric trial, and increased spending on other research, preclinical and development costs. Other research, preclinical and development costs increased due to increased spending on BCX17725 and avoralstat for investigational new drug application-enabling activities and increased spending related to our other early-stage discovery programs.

Current wording

Research and development expenses decreased to $41.1 million for the three months ended September 30, 2024 from $46.9 million for the three months ended September 30, 2023, primarily due to a decrease in Factor D program expenses. The decrease in Factor D program expenses was primarily attributed to the discontinuation of the BCX10013 program. This decrease in research and development expenses was partially offset by increased spending on berotralstat due to our ORLADEYO APeX-P clinical trial and increased spending on other research, preclinical and development costs. Other research, preclinical and development costs increased due to increased spending on avoralstat for investigational new drug application-enabling activities and increased investments to advance our other early-stage discovery programs. Further, there was an increase in stock-based compensation expense as a result of the BioCryst Pharmaceuticals, Inc. Equity Award Retirement Policy (the “Retirement Policy”) adopted in July 2024.

Previous wording

Selling, general and administrative expenses for the three months ended June 30, 2024 were $61.2 million compared to $51.0 million for the three months ended June 30, 2023. The increase was primarily due to an increase in commercial expenses to support our growing revenue as well as our newly launched regions and expanded international operations. Further, there was an increase in general and administrative expenses attributed to an increase in headcount and consulting spend to support our accounting function and an increase in information technology costs to support our growing organization.

Current wording

Selling, general and administrative expenses for the three months ended September 30, 2024 were $65.1 million compared to $50.6 million for the three months ended September 30, 2023. The increase was primarily due to an increase in commercial expenses to support our growing revenue as well as our newly launched regions and expanded international operations. Further, there was an increase in general and administrative expenses to support our commercial growth and an increase in stock-based compensation expense as a result of the Retirement Policy adopted in July 2024.

Previous wording

Interest expense for the three months ended June 30, 2024 was $24.7 million compared to $28.9 million for the three months ended June 30, 2023. The decrease in interest expense was primarily due to the decrease in the effective interest rate related to the 2021 RPI Royalty Purchase Agreement (as defined in “Note 6—Royalty Financing Obligations—ORLADEYO and Factor D Inhibitors” in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this report), partially offset by an increase in interest expense associated with the interest accrued on the Tranche A Loan of $300.0 million under the Pharmakon Loan Agreement (as defined below), which was funded on April 17, 2023.

Current wording

Interest expense for the three months ended September 30, 2024 was $24.8 million compared to $27.3 million for the three months ended September 30, 2023. The decrease in interest expense was primarily due to the decrease in the effective interest rate related to the 2021 RPI Royalty Purchase Agreement (as defined in “Note 6—Royalty Financing Obligations—ORLADEYO and Factor D Inhibitors” in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this report).

Previous wording

Interest expense for the six months ended June 30, 2024 included $28.5 million of non-cash interest expense due to the amortization of interest associated with the royalty financing obligations and $20.6 million of interest expense, including the amortization of the deferred financing associated with the borrowings under the Pharmakon Loan Agreement. Interest expense for the six months ended June 30, 2023 included $38.8 million of non-cash interest expense due to the amortization of interest associated with the royalty financing obligations, $9.5 million of interest expense, including the amortization of the deferred financing associated with the borrowings under the Athyrium Credit Agreement, and

Current wording

Interest expense for the three months ended September 30, 2024 was primarily comprised of $14.0 million of non-cash interest expense due to the amortization of interest associated with the royalty financing obligations and $10.7 million of interest expense, including the amortization of the deferred financing associated with the borrowings under the Pharmakon Loan Agreement (as defined below). Interest expense for the three months ended September 30, 2023 was primarily comprised of $17.3 million of non-cash interest expense due to the amortization of interest associated with the royalty financing obligations and $9.9 million of interest expense, including the amortization of the deferred financing associated with the borrowings under the Pharmakon Loan Agreement.

Previous wording

For the six months ended June 30, 2024, interest income was $7.6 million compared to $7.1 million for the six months ended June 30, 2023. Net foreign currency losses were $0.1 million for the six months ended June 30, 2024 compared to net foreign currency gains of $0.1 million for the six months ended June 30, 2023. For the six months ended June 30, 2023, loss on extinguishment of debt associated with the repayment of the term loans under the Athyrium Credit Agreement was $29.0 million.

Current wording

For the three months ended September 30, 2024, interest income was $3.6 million compared to $4.2 million for the three months ended September 30, 2023. Net foreign currency gains were $0.1 million for the three months ended September 30, 2024 compared to losses of $0.7 million for the three months ended September 30, 2023.

Previous wording

For the six months ended June 30, 2024, income tax expense was $0.5 million compared to $1.4 million for the six months ended June 30, 2023. The decrease in income tax expense is primarily due to an increase in the amortization deduction related to capitalized research and development costs and the reversal of certain tax timing differences.

Current wording

For the three months ended September 30, 2024, income tax expense was $0.6 million compared to $0.3 million for the three months ended September 30, 2023. The increase in income tax expense was primarily due to the decrease in net loss for the three months ended September 30, 2024 compared to the three months ended September 30, 2023.

Previous wording

For the six months ended June 30, 2024, total revenues were $202.1 million compared to $151.3 million for the six months ended June 30, 2023. The increase in total revenues was due to a $47.7 million increase in ORLADEYO net revenue, including royalties, and an increase in other revenues of $3.1 million due to an increase in royalties for sales of peramivir in the first quarter of 2024.

Current wording

For the nine months ended September 30, 2024, total revenues were $319.2 million compared to $238.0 million for the nine months ended September 30, 2023. The increase in total revenues was due to a $78.4 million increase in ORLADEYO net revenue, including royalties, primarily due to an increase in direct sales of ORLADEYO, and an increase in other revenues of $2.8 million, primarily due to an increase in royalties for sales of peramivir and an increase in direct sales of RAPIVAB.

Previous wording

Cost of product sales for the six months ended June 30, 2024 and 2023 was $3.0 million and $1.8 million, respectively. The increase in cost of product sales was primarily due to an increase in ORLADEYO sales in the current year period.

Current wording

Cost of product sales for the nine months ended September 30, 2024 and 2023 was $6.2 million and $2.9 million, respectively. The increase in cost of product sales was primarily due to an increase in ORLADEYO sales and an increase in the inventory reserve in the current year period.

Previous wording

Research and development expenses decreased to $37.6 million for the three months ended June 30, 2024 from $51.2 million for the three months ended June 30, 2023, primarily due to a decrease in Factor D program expenses. The decrease in Factor D program expenses was primarily attributed to decreased spending on BCX10013 and the discontinuation of the BCX9930 program. These reductions to research and development expenses were partially offset by increased spending on berotralstat due to our ongoing ORLADEYO pediatric trial, and increased spending on other research, preclinical and development costs. Other research, preclinical and development costs increased due to increased spending on BCX17725 and avoralstat for investigational new drug application-enabling activities and increased spending related to our other early-stage discovery programs.

Current wording

Research and development expenses decreased to $125.2 million for the nine months ended September 30, 2024 from $146.5 million for the nine months ended September 30, 2023, primarily due to a decrease in Factor D program expenses. The decrease in Factor D program expenses was primarily attributed to decreased spending on BCX10013 and the discontinuation of the BCX9930 program. These reductions to research and development expenses were partially offset by increased spending on berotralstat due to our ORLADEYO APeX-P clinical trial and increased spending on other research, preclinical and development costs. Other research, preclinical and development costs increased due to increased spending on BCX17725 and avoralstat for investigational new drug application-enabling activities and increased investments to advance our other early-stage discovery programs. Further, there was an increase in stock-based compensation expense as a result of the Retirement Policy adopted in July 2024.

Previous wording

Selling, general and administrative expenses for the six months ended June 30, 2024 were $120.6 million compared to $98.9 million for the six months ended June 30, 2023. The increase was primarily due to an increase in commercial expenses to support our growing revenue as well as our newly launched regions and expanded international operations. Further, there was an increase in general and administrative expenses primarily attributed to an increase in headcount and consulting spend to support our accounting function and an increase in information technology and human resources costs to support our growing organization.

Current wording

Selling, general and administrative expenses for the nine months ended September 30, 2024 were $185.7 million compared to $149.5 million for the nine months ended September 30, 2023. The increase was primarily due to an increase in commercial expenses to support our growing revenue as well as our newly launched regions and expanded international operations. Further, there was an increase in general and administrative expenses primarily attributed to an increase in headcount and consulting spend to support our accounting function, an increase in information technology and human resources costs to support our commercial growth and an increase in stock-based compensation expense as a result of the Retirement Policy adopted in July 2024.

Previous wording

Interest expense for the six months ended June 30, 2024 was $49.2 million compared to $56.3 million for the six months ended June 30, 2023. The decrease in interest expense was primarily due to the decrease in the effective interest rate related to the 2021 RPI Royalty Purchase Agreement (as defined in “Note 6—Royalty Financing Obligations—ORLADEYO and Factor D Inhibitors” in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this report), partially offset by an increase in interest expense associated with the interest accrued on the Tranche A Loan of $300.0 million under the Pharmakon Loan Agreement, which was funded on April 17, 2023.

Current wording

Interest expense for the nine months ended September 30, 2024 was $74.1 million compared to $83.7 million for the nine months ended September 30, 2023. The decrease in interest expense was primarily due to the decrease in the effective interest rate related to the 2021 RPI Royalty Purchase Agreement (as defined in “Note 6—Royalty Financing Obligations—ORLADEYO and Factor D Inhibitors” in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this report), partially offset by an increase in interest expense associated with the interest accrued on the Tranche A Loan of $300.0 million under the Pharmakon Loan Agreement, which was funded on April 17, 2023.

Previous wording

Interest expense for the three months ended June 30, 2024 included $14.3 million of non-cash interest expense due to the amortization of interest associated with the royalty financing obligations and $10.4 million of interest expense, including the amortization of the deferred financing associated with the borrowings under the Pharmakon Loan Agreement. Interest expense for the three months ended June 30, 2023 included $19.5 million of non-cash interest expense due to the amortization of interest associated with the royalty financing obligations, $7.9 million of interest expense, including the amortization of the deferred financing associated with the borrowings under the Pharmakon Loan Agreement, and $1.5 million of interest expense, including the amortization of the deferred financing associated with the borrowings under the Athyrium Credit Agreement (as defined below).

Current wording

Interest expense for the nine months ended September 30, 2024 was primarily comprised of $42.5 million of non-cash interest expense due to the amortization of interest associated with the royalty financing obligations and $31.3 million of interest expense, including the amortization of the deferred financing associated with the borrowings under the Pharmakon Loan Agreement. Interest expense for the nine months ended September 30, 2023 was primarily comprised of $56.1 million of non-cash interest expense due to the amortization of interest associated with the royalty financing obligations, $17.8 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, including the amortization of the deferred financing associated with the borrowings under the Athyrium Credit Agreement (as defined below).

Previous wording

For the three months ended June 30, 2024, interest income was $3.6 million compared to $3.8 million for the three months ended June 30, 2023. Net foreign currency losses were $0.1 million for the three months ended June 30, 2024 compared to net foreign currency gains of $0.3 million for the three months ended June 30, 2023. For the three months ended June 30, 2023, loss on extinguishment of debt associated with the repayment of the term loans under the Athyrium Credit Agreement was $29.0 million.

Current wording

For the nine months ended September 30, 2024, interest income was $11.2 million compared to $11.3 million for the nine months ended September 30, 2023. Net foreign currency losses were less than $0.1 million for the nine months ended September 30, 2024 compared to $0.7 million for the nine months ended September 30, 2023. For the nine months ended September 30, 2023, loss on extinguishment of debt associated with the repayment of the term loans under the Athyrium Credit Agreement was $29.0 million.

Previous wording

For the three months ended June 30, 2024, income tax expense was $0.2 million compared to $0.7 million for the three months ended June 30, 2023. The decrease in income tax expense is primarily due to an increase in the amortization deduction related to capitalized research and development costs and the reversal of certain tax timing differences.

Current wording

For the nine months ended September 30, 2024, income tax expense was $1.1 million compared to $1.7 million for the nine months ended September 30, 2023. The decrease in income tax expense is primarily due to an increase in the amortization deduction related to capitalized research and development costs and the reversal of certain tax timing differences.

Previous wording

On April 17, 2023, we entered into a $450.0 million Loan Agreement (the “Pharmakon Loan Agreement”) with BioPharma Credit Investments V (Master) LP and BPCR Limited Partnership, as lenders, and BioPharma Credit PLC, as collateral agent for the lenders. The Pharmakon Loan Agreement provides for an initial term loan in the principal amount of $300.0 million (the “Tranche A Loan”), which was funded on April 17, 2023. We utilized the proceeds from the Tranche A Loan to repay the approximate $241.8 million of outstanding indebtedness under the then-existing credit facility with Athyrium Opportunities III Co-Invest 1 LP (the “Athyrium Credit Agreement”) and to pay transaction costs and fees, and we used the remaining net proceeds of approximately $25.8 million for other general corporate purposes. The Pharmakon Loan Agreement also provides for three additional term loan tranches in principal amounts of $50.0 million each, which we may request, at our option, on or prior to September 30, 2024. The maturity date of the Pharmakon Loan Agreement is April 17, 2028.

Current wording

On April 17, 2023, we entered into a $450.0 million Loan Agreement (the “Pharmakon Loan Agreement”) with BioPharma Credit Investments V (Master) LP and BPCR Limited Partnership, as lenders, and BioPharma Credit PLC, as collateral agent for the lenders. The Pharmakon Loan Agreement provides for an initial term loan in the principal amount of $300.0 million (the “Tranche A Loan”), which was funded on April 17, 2023. We utilized the proceeds from the Tranche A Loan to repay the approximate $241.8 million of outstanding indebtedness under the then-existing credit facility with Athyrium Opportunities III Co-Invest 1 LP (the “Athyrium Credit Agreement”) and to pay transaction costs and fees, and we used the remaining net proceeds of approximately $25.8 million for other general corporate purposes. The Pharmakon Loan Agreement also provided for three additional term loan tranches in principal amounts of $50.0 million each, which we could have requested, at our option, on or prior to September 30, 2024. We did not request any of the additional term loan tranches. The maturity date of the Pharmakon Loan Agreement is April 17, 2028.

Previous wording

Our principal sources of liquidity at June 30, 2024 were approximately $78.4 million in cash and cash equivalents and approximately $257.9 million in investments considered available-for-sale.

Current wording

Our principal sources of liquidity at September 30, 2024 were approximately $96.8 million in cash and cash equivalents and approximately $252.6 million in investments considered available-for-sale.

Previous wording

During the six months ended June 30, 2024, net cash used in operating activities of $55.1 million consisted primarily of a net loss of $48.1 million and $66.8 million of changes in operating assets and liabilities, primarily due to a decrease in accounts payable and accrued expenses and an increase in accounts receivable, partially offset by $59.8 million of non-cash items, including $39.0 million of non-cash interest expense and $26.8 million of stock-based compensation expense.

Current wording

During the nine months ended September 30, 2024, net cash used in operating activities of $46.8 million consisted primarily of a net loss of $62.1 million and $76.0 million of changes in operating assets and liabilities, primarily due to a decrease in accounts payable and accrued expenses and an increase in receivables, partially offset by $91.2 million of non-cash items, including $53.6 million of non-cash interest expense and $44.1 million of stock-based compensation expense.

Previous wording

During the six months ended June 30, 2023, net cash used in operating activities of $66.3 million consisted primarily of a net loss of $128.7 million and $34.3 million of changes in operating assets and liabilities, primarily due to a decrease in accounts payable and accrued expenses and an increase in accounts receivable, partially offset by $96.6 million of non-cash items, including $43.9 million of non-cash interest expense, the loss on extinguishment of debt associated with the repayment of the term loans under the Athyrium Credit Agreement of $29.0 million, and $26.8 million of stock-based compensation expense.

Current wording

During the nine months ended September 30, 2023, net cash used in operating activities of $86.2 million consisted primarily of a net loss of $164.8 million and $50.5 million of changes in operating assets and liabilities, primarily due to a decrease in accounts payable and accrued expenses and increases in prepaid expenses and other assets, receivables, and inventory, partially offset by $129.1 million of non-cash items, including $66.3 million of non-cash interest expense, $39.1 million of stock-based compensation expense, and the loss on extinguishment of debt associated with the repayment of the term loans under the Athyrium Credit Agreement of $29.0 million.

Previous wording

During the six months ended June 30, 2024, net cash provided by investing activities of $26.3 million primarily related to sales and maturities of investment securities, partially offset by purchases of investment securities.

Current wording

During the nine months ended September 30, 2024, net cash provided by investing activities of $34.8 million primarily related to maturities of investment securities, partially offset by purchases of investment securities.

Previous wording

During the six months ended June 30, 2023, net cash used in investing activities of $126.1 million primarily related to purchases of investment securities, partially offset by sales and maturities of investment securities.

Current wording

During the nine months ended September 30, 2023, net cash used in investing activities of $103.0 million primarily related to purchases of investment securities, partially offset by maturities of investment securities.

Previous wording

During the six months ended June 30, 2024, net cash used in financing activities of $3.0 million primarily consisted of withholding taxes paid on stock-based awards and principal payments on finance lease liabilities, partially offset by net proceeds from common stock issued under stock-based compensation plans.

Current wording

During the nine months ended September 30, 2024, net cash used in financing activities of $1.7 million primarily consisted of withholding taxes paid on stock-based awards and principal payments on finance lease liabilities, partially offset by net proceeds from common stock issued under stock-based compensation plans.

Previous wording

During the six months ended June 30, 2023, net cash provided by financing activities of $34.4 million primarily consisted of net proceeds from the Pharmakon Loan Agreement and net proceeds from common stock issued under stock-based compensation plans, partially offset by the repayment of the secured term loans under the Athyrium Credit Agreement.

Current wording

During the nine months ended September 30, 2023, net cash provided by financing activities of $35.7 million primarily consisted of net proceeds from the Pharmakon Loan Agreement and net proceeds from common stock issued under stock-based compensation plans, partially offset by the repayment of the secured term loans under the Athyrium Credit Agreement.

Previous wording

We intend to contain costs and cash flow requirements by closely managing our third-party costs and headcount, leasing scientific equipment and facilities, and contracting with other parties to conduct certain research and development projects. In addition, we reduced the size of our research and development organization and postponed previously planned capital expenditures at our Discovery Center in Alabama in January 2024, which we believe will help accelerate our path to profitability.

Current wording

We intend to contain costs and cash flow requirements by closely managing our third-party costs and headcount, leasing scientific equipment and facilities, and contracting with other parties to conduct certain research and development projects. In addition, we reduced the size of our research and development organization and postponed previously planned capital expenditures at our Discovery Center in Alabama in January 2024, which we believe is helping accelerate our path to profitability.

Previous wording

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.

Current wording

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 amount and timing of funding we receive, if any, from U.S. Government contracts, 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.

Previous wording

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. However, we have sustained operating losses for the majority of our corporate history and expect that our total 2024 expenses (including stock-based compensation expense) 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. Our liquidity needs will be largely determined by the success of operations in regard to the successful commercialization of our products and the future progression of our product candidates. 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) 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. Government funding of our programs, including obtaining procurement contracts. We may, in the future, issue securities, including common stock, preferred stock, depositary shares, purchase contracts, warrants, debt securities, and units, through private placement transactions or registered public offerings. Our future liquidity needs, and our ability to address those needs, will largely be determined by the success of our products and product candidates; the timing, scope, and magnitude of our research and development and commercial expenses; and key developments and regulatory events and our decisions in the future.

Current wording

out-licensing rights to certain of our products or product candidates, pursuant to which we would receive cash milestone payments; (2) 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. Government funding of our programs, including obtaining procurement contracts. We may, in the future, issue securities, including common stock, preferred stock, depositary shares, purchase contracts, warrants, debt securities, and units, through private placement transactions or registered public offerings. Our future liquidity needs, and our ability to address those needs, will largely be determined by the success of our products and product candidates; the timing, scope, and magnitude of our research and development and commercial expenses; and key developments and regulatory events and our decisions in the future.