SEC Company Response from BIOCRYST PHARMACEUTICALS INC (BCRX) (CIK 0000882796) (BCRX) — Feb 5, 2007
BIOCRYST PHARMACEUTICALS INC (BCRX) (CIK 0000882796)
Date: Feb. 5, 2007 · CIK: 0000882796 · Accession: 0000950134-07-001998
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 000-23186
Referenced dates: December 15, 2006, November 15, 2006
Letter
Via EDGAR and Overnight Courier Division of Corporation Finance BioCryst Pharmaceuticals, Inc. Form 10-K for the Fiscal Year Ended December 31, 2005 Filed March 9, 2006 File No. 000-23186
Dear Mr. Rosenberg:
On behalf of BioCryst Pharmaceuticals, Inc. (the “Company”), please find the responses and the supplemental information requested by the Staff of the Securities and Exchange Commission (the “Staff”) in its letter dated November 15, 2006 to Charles E. Bugg, Ph.D., Chairman and Chief Executive Officer of the Company, which the Company received on December 4, 2006 (the “Comment Letter”), with respect to the above-referenced Annual Report on Form 10-K of the Company. The responses and supplemental information provided herein in response to the Comment Letter are based upon conferences with representatives of the Company and other information supplied by its advisors. We have not independently verified the accuracy and completeness of such information.
The full text of the comment contained in the Comment Letter has been reproduced below, followed by the Company’s response.
Mr. Jim B. Rosenberg
December 15, 2006
Page 2
Form 10-K for the Fiscal Year Ended December 31, 2005
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,
page 34
Overview, Page 34
1.
We note your detailed discussion of the status of each of your significant project in the business section. To further supplement the usefulness of that information, please provide to us in disclosure type format the following information for each of your major research and development projects identified:
a)
The costs incurred during each period presented and to date on the project;
b)
The nature, timing and estimated costs of the efforts necessary to complete the project;
c)
The anticipated completion dates;
d)
The risks and uncertainties associated with completing development on schedule, and the consequences to operations, financial position and liquidity if the project is not completed timely; and finally
e)
The period in which material net cash inflows from significant projects are expected to commence.
To the extent that information requested above is not known or estimable, disclose that fact and the reason why it is not known.
As requested, the Company hereby supplementally provides the Staff with the information in disclosure type format enclosed herewith as Exhibit A, which details the costs incurred during each of the years ended December 31, 2005, 2004 and 2003 for each major product development program identified in the Business section of the Form 10-K. The enclosed disclosure also sets forth the risks and uncertainties associated with completing development of each program. However, determination of the costs incurred to date are not disclosed, due to the fact that the information is not readily available.
Mr. Jim B. Rosenberg
December 15, 2006
Page 3
To disclose such information would require substantial assumptions without adequate basis. Further, based on the Company’s current development status of these projects, we would not expect the presentation of historical costs to be important to investors.
The Company hereby advises the Staff that at this time it cannot predict the anticipated completion date of or the period in which material net cash inflows are expected to commence from each project. As described in the enclosed disclosure, completion dates and material net cash inflows from the Company’s research and development programs are subject to a number of risks and uncertainties, including the availability of capital, the development progress of existing or potential future partnerships for its drug candidates, the progress and results of the Company’s current and proposed clinical trials for its drug candidates and the allocation of resources among programs.
Other
In connection with responding to the Staff’s comments, and as requested in the Comment Letter, enclosed with the letter is a statement from the Company acknowledging that:
•
the Company is responsible for the adequacy and accuracy of the disclosure in the filing;
•
staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and
•
the Company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
Mr. Jim B. Rosenberg
December 15, 2006
Page 4
If you would like to discuss the responses above or any other matter, please contact the undersigned at (303) 866-0583 or Jennifer D’Alessandro at (303) 866-0635.
Sincerely,
/s/ Richard R. Plumridge
Richard R. Plumridge
cc:
Kei Ino
Jim Atkinson
Charles E. Bugg, Ph.D.
Michael A. Darwin
Exhibit A
Supplemental Disclosure on Research and Development Expenses
Research and Development Expenses
Major components of R&D expenses consist of personnel costs, including salaries and benefits, manufacturing costs, clinical, regulatory, and toxicology services performed by contract research organizations (CRO’s), materials and supplies, and overhead allocations consisting of various administrative and facilities related costs. We charge these costs to expense when incurred, consistent with Statement of Financial Accounting Standards No. 2, Accounting for Research and Development Costs. These costs are a significant component of R&D expenses. Most of our manufacturing and our clinical and preclinical studies are performed by third-party CRO’s. We accrue costs for studies performed by CRO’s over the service periods specified in the contracts and adjust our estimates, if required, based upon our on-going review of the level of services actually performed. We expense both our internal and external research and development costs as incurred.
Additionally, we have license agreements with third parties, such as AECOM and IRL that require maintenance fees or fees related to sublicense agreements. These fees are generally expensed as incurred unless they are related to revenues that have been deferred in which case the expenses will be deferred and recognized over the related revenue recognition period.
We group our R&D expenses into two major categories: direct external expenses and all other R&D expenses. Direct external expenses consist of costs of outside parties to conduct laboratory studies, to develop manufacturing processes and manufacture the product candidate, to conduct and manage clinical trials and similar costs related to our clinical and preclinical studies. These costs are accumulated and tracked by program. All other R&D expenses consist of costs to compensate personnel, to purchase lab supplies and services, to maintain our facility, equipment and overhead and similar costs of our research and development efforts. These costs apply to work on our clinical and preclinical candidates as well as our discovery research efforts. These costs have not been charged directly to each program historically because the number of product candidates and projects in research and development may vary from period to period and because we utilize internal resources across multiple projects at the same time.
The following table summarizes our R&D expenses for the periods indicated:
Year Ended December 31,
Direct external R&D expenses by program:
PNP Inhibitor (Fodosine™)
9,256,417
8,031,922
3,223,202
PNP Inhibitor (BCX-4208)
3,563,966
2,815,773
—
Neuraminidase Inhibitor (peramivir)
1,454,738
27,059
160,489
Hepatitis C Polymerase Inhibitor
446,828
205,741
255,581
Tissue Factor/Factor VIIa Inhibitor
25,072
472,633
597,039
Other
21,167
19,451
22,361
All other R&D Expenses
8,874,189
7,295,533
7,263,310
Total R&D Expenses
$ 23,642,377
$ 18,868,112
$ 11,521,982
At this time, due to the risks inherent in the clinical trial process and given the stages of our various product development programs, we are unable to estimate with any certainty the costs we will incur in the continued development of our drug candidates for potential commercialization. While we are currently focused on advancing each of our product development programs, our future R&D expenses will depend on the determinations we make as to the scientific and clinical success of each drug candidate, as well as ongoing assessments as to each drug candidate’s commercial potential. As such, we are unable to predict how we will allocate available resources among our product development programs in the future. In addition, we cannot forecast with any degree of certainty the development progress of our existing partnerships for our drug candidates, which drug candidates will be subject to future collaborations, when such arrangements will be secured, if at all, and to what degree such arrangements would affect our development plans and capital requirements.
The successful development of our drug candidates is uncertain and subject to a number of risks. We cannot be certain that any of our drug candidates will prove to be safe and effective or will meet all of the applicable regulatory requirements needed to receive and maintain marketing approval. Data from preclinical studies and clinical trials are susceptible to varying interpretations that could delay, limit or prevent regulatory clearance. We, the FDA or other regulatory authorities may suspend clinical trials at any time if we or they believe that the subjects participating in such trials are being exposed to unacceptable risks or if such regulatory agencies find deficiencies in the conduct of the trials or other problems with our products under development. Delays or rejections may be encountered based on additional governmental regulation, legislation, administrative action or changes in FDA or other regulatory policy during development or the review process. Other risks associated with our product development programs are described in Risk Factors in Part I, Item 1A of this Annual Report on Form 10-K, as updated from time to time in our subsequent periodic reports and current reports filed with the SEC. Due to these uncertainties, accurate and meaningful estimates of the ultimate cost to bring a product to market, the timing of completion of any of our product development programs and the period in which material net cash inflows from any of our product development programs will commence are unavailable.
[LETTERHEAD OF HOLME ROBERTS & OWEN LLP]
January 19, 2007
Via EDGAR and Overnight Courier
Mr. Jim B. Rosenberg
Senior Assistant Chief Accountant
Division of Corporation Finance
U.S. Securities and Exchange Commission
100 F Street, N.E.
Washington, D. C. 20549-6010
Re:
BioCryst Pharmaceuticals, Inc.
Form 10-K for the Fiscal Year Ended December 31, 2005
Filed March 9, 2006
File No. 000-23186
Dear Mr. Rosenberg:
On behalf of BioCryst Pharmaceuticals, Inc. (the “Company”), please find the responses and the supplemental information requested orally by the Staff of the Securities and Exchange Commission (the “Staff”) in a telephone conversation on January 9, 2007 (the “Jan. 9 Comment”), with respect to the above-referenced Annual Report on Form 10-K of the Company. The responses and supplemental information provided herein in response to the Jan. 9 Comment are based upon conferences with representatives of the Company and other information supplied by its advisors. We have not independently verified the accuracy and completeness of such information.
As requested, the Company has revised the supplemental tabular disclosure previously provided to the Staff in the response letter dated December 15, 2006 (the “Dec. 15 Response Letter”), to quantify the categories of costs incurred under the “All other R&D expenses” category. The revised supplemental tabular disclosure is enclosed herewith as Exhibit B. The Company undertakes to include disclosure of the type enclosed with the Dec. 15 Response Letter as Exhibit A, as modified in accordance with
Mr. Jim B. Rosenberg
January 19, 2007
Page 2
Exhibit B enclosed herewith, in its Management’s Discussion and Analysis for future reporting periods, commencing with the Company’s Annual Report on Form 10-K for the year ended December 31, 2006.
If you would like to discuss the responses above or any other matter, please contact the undersigned at (303) 866-0583 or Jennifer D’Alessandro at (303) 866-0635.
Sincerely,
/s/ Richard R. Plumridge
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[LETTERHEAD OF HOLME ROBERTS & OWEN LLP]
December 15, 2006
Via EDGAR and Overnight Courier
Mr. Jim B. Rosenberg
Senior Assistant Chief Accountant
Division of Corporation Finance
U.S. Securities and Exchange Commission
100 F Street, N.E.
Washington, D. C. 20549-6010
Re:
BioCryst Pharmaceuticals, Inc.
Form 10-K for the Fiscal Year Ended December 31, 2005
Filed March 9, 2006
File No. 000-23186
Dear Mr. Rosenberg:
On behalf of BioCryst Pharmaceuticals, Inc. (the “Company”), please find the responses and the
supplemental information requested by the Staff of the Securities and Exchange Commission (the
“Staff”) in its letter dated November 15, 2006 to Charles E. Bugg, Ph.D., Chairman and Chief
Executive Officer of the Company, which the Company received on December 4, 2006 (the “Comment
Letter”), with respect to the above-referenced Annual Report on Form 10-K of the Company. The
responses and supplemental information provided herein in response to the Comment Letter are based
upon conferences with representatives of the Company and other information supplied by its
advisors. We have not independently verified the accuracy and completeness of such information.
The full text of the comment contained in the Comment Letter has been reproduced below,
followed by the Company’s response.
Mr. Jim B. Rosenberg
December 15, 2006
Page 2
Form 10-K for the Fiscal Year Ended December 31, 2005
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,
page 34
Overview, Page 34
1.
We note your detailed discussion of the status of each of your significant project in the
business section. To further supplement the usefulness of that information, please provide to
us in disclosure type format the following information for each of your major research and
development projects identified:
a)
The costs incurred during each period presented and to date on the project;
b)
The nature, timing and estimated costs of the efforts necessary to complete
the project;
c)
The anticipated completion dates;
d)
The risks and uncertainties associated with completing development on
schedule, and the consequences to operations, financial position and liquidity if the
project is not completed timely; and finally
e)
The period in which material net cash inflows from significant projects are
expected to commence.
To the extent that information requested above is not known or estimable, disclose that
fact and the reason why it is not known.
As requested, the Company hereby supplementally provides the Staff with the information in
disclosure type format enclosed herewith as Exhibit A, which details the costs incurred
during each of the years ended December 31, 2005, 2004 and 2003 for each major product development
program identified in the Business section of the Form 10-K. The enclosed disclosure also sets
forth the risks and uncertainties associated with completing development of each program. However,
determination of the costs incurred to date are not disclosed, due to the fact that the information
is not readily available.
Mr. Jim B. Rosenberg
December 15, 2006
Page 3
To disclose such information would require substantial assumptions without adequate basis.
Further, based on the Company’s current development status of these projects, we would not expect
the presentation of historical costs to be important to investors.
The Company hereby advises the Staff that at this time it cannot predict the anticipated
completion date of or the period in which material net cash inflows are expected to commence from
each project. As described in the enclosed disclosure, completion dates and material net cash
inflows from the Company’s research and development programs are subject to a number of risks and
uncertainties, including the availability of capital, the development progress of existing or
potential future partnerships for its drug candidates, the progress and results of the Company’s
current and proposed clinical trials for its drug candidates and the allocation of resources among
programs.
Other
In connection with responding to the Staff’s comments, and as requested in the Comment Letter,
enclosed with the letter is a statement from the Company acknowledging that:
•
the Company is responsible for the adequacy and accuracy of the disclosure
in the filing;
•
staff comments or changes to disclosure in response to staff comments do
not foreclose the Commission from taking any action with respect to the filing; and
•
the Company may not assert staff comments as a defense in any proceeding
initiated by the Commission or any person under the federal securities laws of the
United States.
Mr. Jim B. Rosenberg
December 15, 2006
Page 4
If you would like to discuss the responses above or any other matter, please contact the
undersigned at (303) 866-0583 or Jennifer D’Alessandro at (303) 866-0635.
Sincerely,
/s/ Richard R. Plumridge
Richard R. Plumridge
cc:
Kei Ino
Jim Atkinson
Charles E. Bugg, Ph.D.
Michael A. Darwin
Exhibit A
Supplemental Disclosure on Research and Development Expenses
Research and Development Expenses
Major components of R&D expenses consist of personnel costs, including salaries and benefits,
manufacturing costs, clinical, regulatory, and toxicology services performed by contract research
organizations (CRO’s), materials and supplies, and overhead allocations consisting of various
administrative and facilities related costs. We charge these costs to expense when incurred,
consistent with Statement of Financial Accounting Standards No. 2, Accounting for Research and
Development Costs. These costs are a significant component of R&D expenses. Most of our
manufacturing and our clinical and preclinical studies are performed by third-party CRO’s. We
accrue costs for studies performed by CRO’s over the service periods specified in the contracts and
adjust our estimates, if required, based upon our on-going review of the level of services actually
performed. We expense both our internal and external research and development costs as incurred.
Additionally, we have license agreements with third parties, such as AECOM and IRL that
require maintenance fees or fees related to sublicense agreements. These fees are generally
expensed as incurred unless they are related to revenues that have been deferred in which case the
expenses will be deferred and recognized over the related revenue recognition period.
We group our R&D expenses into two major categories: direct external expenses and all other
R&D expenses. Direct external expenses consist of costs of outside parties to conduct laboratory
studies, to develop manufacturing processes and manufacture the product candidate, to conduct and
manage clinical trials and similar costs related to our clinical and preclinical studies. These
costs are accumulated and tracked by program. All other R&D expenses consist of costs to compensate
personnel, to purchase lab supplies and services, to maintain our facility, equipment and overhead
and similar costs of our research and development efforts. These costs apply to work on our
clinical and preclinical candidates as well as our discovery research efforts. These costs have not
been charged directly to each program historically because the number of product candidates and
projects in research and development may vary from period to period and because we utilize internal
resources across multiple projects at the same time.
The following table summarizes our R&D expenses for the periods indicated:
Year Ended December 31,
2005
2004
2003
Direct external R&D expenses by program:
PNP Inhibitor (Fodosine™)
9,256,417
8,031,922
3,223,202
PNP Inhibitor (BCX-4208)
3,563,966
2,815,773
—
Neuraminidase Inhibitor (peramivir)
1,454,738
27,059
160,489
Hepatitis C Polymerase Inhibitor
446,828
205,741
255,581
Tissue Factor/Factor VIIa Inhibitor
25,072
472,633
597,039
Other
21,167
19,451
22,361
All other R&D Expenses
8,874,189
7,295,533
7,263,310
Total R&D Expenses
$
23,642,377
$
18,868,112
$
11,521,982
At this time, due to the risks inherent in the clinical trial process and given the
stages of our various product development programs, we are unable to estimate with any certainty
the costs we will incur in the continued development of our drug candidates for potential
commercialization. While we are currently focused on advancing each of our product development
programs, our future R&D expenses will depend on the determinations we make as to the scientific
and clinical success of each drug candidate, as well as ongoing assessments as to each drug
candidate’s commercial potential. As such, we are unable to predict how we will allocate available
resources among our product development programs in the future. In addition, we cannot forecast
with any degree of certainty the development progress of our existing partnerships for our drug
candidates, which drug candidates will be subject to future collaborations, when such arrangements
will be secured, if at all, and to what degree such arrangements would affect our development plans
and capital requirements.
The successful development of our drug candidates is uncertain and subject to a number of
risks. We cannot be certain that any of our drug candidates will prove to be safe and effective or
will meet all of the applicable regulatory requirements needed to receive and maintain marketing
approval. Data from preclinical studies and clinical trials are susceptible to varying
interpretations that could delay, limit or prevent regulatory clearance. We, the FDA or other
regulatory authorities may suspend clinical trials at any time if we or they believe that the
subjects participating in such trials are being exposed to unacceptable risks or if such regulatory
agencies find deficiencies in the conduct of the trials or other problems with our products under
development. Delays or rejections may be encountered based on additional governmental regulation,
legislation, administrative action or changes in FDA or other regulatory policy during development
or the review process. Other risks associated with our product development programs are described
in Risk Factors in Part I, Item 1A of this Annual Report on Form 10-K, as updated from time to time
in our subsequent periodic reports and current reports filed with the SEC. Due to these uncertainties, accurate and meaningful estimates of the ultimate cost to
bring a product to market, the timing of completion of any of our product development programs and
the period in which material net cash inflows from any of our product development programs will
commence are unavailable.
[LETTERHEAD OF HOLME ROBERTS & OWEN LLP]
January 19, 2007
Via EDGAR and Overnight Courier
Mr. Jim B. Rosenberg
Senior Assistant Chief Accountant
Division of Corporation Finance
U.S. Securities and Exchange Commission
100 F Street, N.E.
Washington, D. C. 20549-6010
Re:
BioCryst Pharmaceuticals, Inc.
Form 10-K for the Fiscal Year Ended December 31, 2005
Filed March 9, 2006
File No. 000-23186
Dear Mr. Rosenberg:
On behalf of BioCryst Pharmaceuticals, Inc. (the “Company”), please find the responses and the
supplemental information requested orally by the Staff of the Securities and Exchange Commission
(the “Staff”) in a telephone conversation on January 9, 2007 (the “Jan. 9 Comment”), with respect
to the above-referenced Annual Report on Form 10-K of the Company. The responses and supplemental
information provided herein in response to the Jan. 9 Comment are based upon conferences with
representatives of the Company and other information supplied by its advisors. We have not
independently verified the accuracy and completeness of such information.
As requested, the Company has revised the supplemental tabular disclosure previously provided
to the Staff in the response letter dated December 15, 2006 (the “Dec. 15 Response Letter”), to
quantify the categories of costs incurred under the “All other R&D expenses” category. The revised
supplemental tabular disclosure is enclosed herewith as Exhibit B. The Company undertakes
to include disclosure of the type enclosed with the Dec. 15 Response Letter as Exhibit A,
as modified in accordance with
Mr. Jim B. Rosenberg
January 19, 2007
Page 2
Exhibit B enclosed herewith, in its Management’s Discussion and Analysis for future
reporting periods, commencing with the Company’s Annual Report on Form 10-K for the year ended
December 31, 2006.
If you would like to discuss the responses above or any other matter, please contact the
undersigned at (303) 866-0583 or Jennifer D’Alessandro at (303) 866-0635.
Sincerely,
/s/ Richard R. Plumridge
Richard R. Plumridge
cc:
Kei Ino
Jim Atkinson
Jon P. Stonehouse
Michael A. Darwin
Exhibit B
Supplemental Disclosure on Research and Development Expenses
Year Ended December 31,
2005
2004
2003
Direct external R&D expenses by program:
PNP Inhibitor (Fodosine™)
$
9,256,417
$
8,031,922
$
3,223,202
PNP Inhibitor (BCX-4208)
3,563,966
2,815,773
—
Neuraminidase Inhibitor (peramivir)
1,454,738
27,059
160,489
Hepatitis C Polymerase Inhibitor
446,828
205,741
255,581
Tissue Factor/Factor VIIa Inhibitor
25,072
472,633
597,039
Other
21,167
19,451
22,361
All other R&D expenses:
Compensation and fringe benefits
3,813,281
3,115,231
2,792,416
Supplies and services
572,056
88,515
695,449
Maintenance, depreciation, and amortization
984,680
1,227,117
1,434,000
Overhead allocation and other
3,504,172
2,864,670
2,341,445
Total R&D Expenses
$
23,642,377
$
18,868,112
$
11,521,982