Last Updated on March 30, 2020 by Sultan Beardsley
With BCRX there are a number of positive features that make it an attractive investment at its current valuation (near 5-year lows; on track to have its second commercial asset approved this year), both in the long and short-term. A high-level analysis shows that the company has a relatively strong financial position ($158M cash vs. $85M in total debt). This means that BCRX can cover its debt obligations with cash on hand.
As we’ve discussed, the number one feature we are excited about is BCRX’s developmental stage broad-spectrum anti-viral drug Galidesivir. Galidesivir has the same mechanism of action as Gilead Science’s (GILD) Remdesivir which neutralizes RNA viruses by inhibiting RNA-synthesis and thus terminating viral replication. GILD has 6 active clinical trials globally testing Remdesivir against COVID-19. Half of those studies are in the U.S, two of which are phase 3. The first phase 3 study is testing two dosing regimens of Remdesivir in addition to the standard of care in severely ill COVID-19 patients. The second phase 3 study is testing the same dosing regimens with the standard of care in moderate cases of COVID-19. Both studies are using treatment with the standard of care alone as the control. Why do we care?
As I mentioned, Galidesivir has the same mechanism of action. Both drugs are adenosine nucleoside analog prodrugs. A key structural/chemical difference is that Remdesivir has an attached phosphate group in its prodrug form (i.e. prior to activation). According to medical professionals in our network, Galidesvir is chemically superior with regards to some anti-viral effects and the ability to be formulated for oral or IV administration. Whereas Remdesivir is only chemically suited for IV use. Before the COVID-19 outbreak, both drugs had been investigated as potential Ebola treatments. In their respective clinical studies, both drugs provided 100% protection against Ebola in 6/6 Rhesus Monkeys.
Presently, Remdesivir is lauded as the top-contender to be a COVID-19 treatment. Based on the immense global disease prevalence, the dire need for effective treatment options while vaccines are still in development, and the parallels discussed between Remdesivir and Galdesivir, we feel it is only a matter of time before Galidesivir joins the ranks of drugs being clinically tested as a potential COVID-19 treatment.
Since 2013, BCRX has been developing Galidesivir under contract with the National Institute of Allergy and Infectious Diseases (NIAID/HHS) and the U.S. Department of Health and Human Services (BARDA/HHS) to combat viral threats to national health and security. While initially, the initial targets were the Marburg virus, Yellow Fever, and Ebola, one would probably agree that the COVID-19 also fits the bill. Furthermore, Galidesivir is being developed under the Animal Rule which allows for animal efficacy data to suffice for marketing approval so long as there is adequate safety data in humans (click here for phase 1 safety data for Galidesivir).
Finally, per remarks made during the latest earnings call (3/5/20) and an investor conference (3/10/20) we know that BCRX has been engaged in discussions with their government partners regarding 1) In-vitro testing against COVID-19. 2) Advancing into clinical trials. 3) Increasing drug supply. (Figure 2)
Figure 2 (edited by the author): Source
The takeaway is we are expecting a positive update regarding the developmental status of Galidesivir as a potential treatment for COVID-19. That news could manifest as in-vitro data, initiation of a phase 2/3 study, or potentially Emergency Use Authorization (EUA). In October 2009 the FDA granted EUA for BCRX’s now commercial asset Peramivir to treat suspected confirmed cases of the H1N1 virus (aka Swine Flu).
While this is all very compelling, it should be noted that Galidesivir has not yet been tested against COVID-19. Therefore, while we are optimistic it would have a beneficial therapeutic effect and thus could play a role in the COVID-19 treatment paradigm, this is not guaranteed. At the price, and further considering the potential commercial approval of its second commercial asset this year (berotralstat), we feel BCRX has an attractive risk vs. reward profile.
We are long BCRX