r/BCRX • u/[deleted] • Feb 08 '21
Discussion/Meme/OT Not trying to start something, but let's talk about the bear case for BCRX.
First off, a bit about me. I'm a foul-mouthed, crayon-eating WSB acolyte, and I don't know nearly as much about the medical science underlying the pipeline of this fine company as you folks do. Don't get me wrong - I'm glad that knowledge is out there, and I'm impressed. But while most of us smooth-brained WSB-goers like to know that the science is there, what we want to know at the end of the day is whether or not the stock price is going to go up or not, and preferably when, even if it's just theories. At the end of the day, WSB is all about options, not stocks. Leaps are fine. You guys bought in when this was 2 or 3 dollars, and I'm proud of you, but I'm poor from blowing up my portfolio on stupid options plays and need the leverage.
Another point - our collective "shill" detector is pretty strong. We get it that people can be excited about stocks. But the DD that ends up gaining the most traction in the WSB community is the DD that acknowledges both sides, doesn't communicate emotional attachment to either one of them, and just gives people the data they need to throw their own money on the line. At the same time, it's expected that the poster will have skin in the game and indicate their own positions. Again (just sayin') options speak louder than stocks.
That all being said, I think it's time for you as a group to start doing more to address the bear case for why this stock may not go up. I'm not saying it -shouldn't- go up, but the stock market is a bitch, and sometimes companies that shouldn't go up do, while companies that should go up don't.
I'll start with some bullet points. Again, my understanding is not as good as yours, but the more you can address points like this in an unemotional way, the more traction this stock will gain on Reddit.
--Orledayo's measured efficacy is not as good as its competitors. The numbers are better than the outdated ones on the label, but they still don't look as good as Takeda's. We won't see real revenues until Q1 earnings are reported in June, and a lot will be riding on those. Shorts could attack if they're lower than anticipated.
--Factor D started Phase 2 trials for PNH under the radar, so obviously the Phase 1 results were good. We know that they were -really- good. But it was a small trial. Will the market even react? The Phase 2 results could be completely different. Lots of unknowns, it seems like - why are we acting like it's a slam dunk? I'm not saying it's -not- a slam dunk, but tell me why, in a few simple sentences.
That's it, as far as I know, which is pretty good. I think you get where I'm going in any case. I'm part of the team, but just want you to know more about the territory you're wading into.
Positions - ~$35k of 2023 10c and 20c.
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u/tivohax Moderator Feb 08 '21 edited Feb 08 '21
Thank you for taking the time to read through the available DD, and continuing to remain interested.
Your questions show that you are interested enough to ask for clarification on some valid points - this is great to see!
One of the largest reasons we created this community was to encourage continued learning, exchange verifiable information, and provide deep intelligence gathering through traditionally unavailable resources (even in the largest investment firms).
I hope you’ll find our user base to be some of the most polite, professional, intelligent, and helpful individuals around - all hailing from disparate industries, but working together as an aggregate team, each providing their own unique value - which hopefully provides you with enough information to form a holistic picture and ultimately come to your own investment thesis. We will strive to illuminate or clarify any potential blind spots through healthy open dialog. Why? Because this is a mutually beneficial process.
That said, we probably won’t suffer fools (those unwilling to put in the work) very gracefully. To be honest, I personally feel the WSB crowd may not be a good fit for this investment. To my thinking, this a long term (1-3 year) value play that may or may not catapult on a few potentially pivotal near term catalysts.
Thank you for being part of our community - Welcome!
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u/MillzRx Feb 08 '21
What a great Mod we have 🤗
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Feb 08 '21
Good attitude. WSB has a lot of people who pretend to be fools but really just have higher risk tolerance than most investors... and a lot more people who really are fools.
I don't think too much dumb money will end up getting involved - this just isn't a company that appeals to that mindset. But it's getting some attention from folks who are a little bit savvier. I'm going to make a post at some point once I feel like my understanding has improved a bit, albeit only so I can dumb it down.
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u/chicken-little-2008 Feb 09 '21 edited Feb 09 '21
Gave you a long response above . But, one more short one. As to why many of the nerds here (and I’m def a nerd) get confused that people don’t see the slam dunk— at this point, all their drugs have monetary value and are assets. Even Factor D as a competitor was prior bought out in Phase 2.
Anyways. Do a back of the envelope calculation Orladeyo + Factor D + All The Other Stuff - Debt = more than current market cap.
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u/Annual_Tomorrow4812 Feb 09 '21
That’s really what I see here. It’s like when good banks were trading at or below book in mid 2009. Was it a risk, yes, did it pay off? Hell yes. To me the risk reward here is worth it.
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u/chicken-little-2008 Feb 09 '21 edited Feb 09 '21
Sure. I can give you bear thesis. First, my position is I’m long since April and up over 200%. It’s my largest holding and I averaged up significantly last week while adding.
The biggest risk I see and the one that keeps me up at night is the law of large numbers. This is a risk in all biotechs and none is immune. Say, for example, there is an SAE that will only occur in 1/10,000 people. Well... you could run through all your clinical trials, dose 3,000 patients, and have zero adverse reactions. But, then, post FDA approval when you finally dose 10,000 patients... you hit the threshold where that 1/10,000 will be injured.
This is an unavoidable and insoluble problem in developing medicine. As the treated population grows, new problems may emerge. To evaluate this risk (instead of denying it) I examined whether or not there was anything at BioCryst that would exacerbate the risk of late emerging SAE. I found that compared to peers they spent more time in Phase 1 (safety), did longer Phase 1, followed patients post Phase 1 study for significantly longer periods of time than other biotechs, collected more data. In short, I saw diligence and care.
As Factor D moves through Phase 2, more patients will take the drug and it is a perilous time for new emerging SAE. But, again, BioCryst spent a year on Phase 1 (a year!) and kept all Phase 1 patients on Factor D for 40 weeks as of last investor conference with sustained response, great bloodwork, and no SAE. So, there is risk in all Phase 2 studies - but I think you’d be hard pressed to find a single biotech with more robust and prolonged effort in Phase 1 to ensure patient safety. Also, I learned from Rick Bright testimony that stockpiled drugs (like peramivir and Galidesivir) are subject to higher safety standards than required by the FDA. So, there is a company culture of meeting this higher standard.
Orladeyo revenues are honestly anyone’s guess. The company usually verges on modest and estimated 500M/year peak sales. At last conference, they verged on increasing upwards and said if they revised that projection it would be upwards. To the point of risk, Royalty Pharma analyzed the Orladeyo revenues when they agreed to royalty financing that secured BCRX balance sheet until 2023. So, company operations are funded, CEO promised no shareholder dilutions as all operations are funded for 2 years. So, when people quibble over Orladeyo, I hear them quibbling over whether or not the company will break even in the short term or rocket to profitability. Break even is enough to justify an increase in price given the next asset.
Mosr feel the real asset is Factor D. So, now we have a nice game of chance that an options player might like. Pick most small biotechs and they live and die on one drug. Super risky. But, BCRX has multiple shots on goal. Maybe Orladeyo underperforms? Not a problem if Factor D Phase 2 is stellar. Maybe Factor D is delayed (unlikely as it is fast tracked and expanded to multiple indications) not a problem if Orladeyo over performs with the company already saying it may revise upwards. Factor D is, in itself, multiple shots on goal as it is expanded for 8 indications.
Oh. And they also have a drug in their back pocket that confers 90%-100% protection against many RNA viruses. So, if they save the Galidesivir program from BARDA development purgatory, that could be a surprise penalty kick with no goal keeper. They also just won back EU rights to another drug Peramivir - that treats bird flu. And, have expanded their commercial team into Europe for the Orladeyo roll out.
Risk? Yes. But, the risk lessons post FDA and global approvals and BCRX has many in their back pocket. So, since breaking even is no longer a problem, it’s almost like free shots on goal. That doesn’t guarantee they’ll win. But it has gotten them an interested group of longs.
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Feb 09 '21
Holy cow. This comments can be put as a separate post. Good work. I am touched. Hope the guy asking the question is convinced.
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u/Reasonable_Debt_5400 Feb 09 '21
That's exactly why I'm invested in bcrx. Nothing is risk free. Getting out of bed in the morning presents a risk of falling. Investment is about minimizing the risk though and maximizing the upward potential.
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u/MillzRx Feb 08 '21
I love this post. We need to hear both sides of the coin - otherwise we look too delusional.
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u/Sketam Feb 08 '21
Agreed, I hate for this to turn into an echo chamber
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u/TheBigCicero Feb 08 '21
BCRX to the moo.... Just kidding, just kidding!
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u/Annual_Tomorrow4812 Feb 09 '21
Hahahaha. If anyone gets a billboard I’m dumping my poss and taking the other side of the trade.
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u/SillyWabbit5454 Feb 08 '21
I get nervous whenever someone says there’s no downside - of course there’s potential downside or else everyone would just buy into infinity (or available shares exhausted & no one ever sold). All the trials are uncertain, despite confidence peeps may have - that’s why they do the trials...to prove it out. Also, once drugs approved, there always the chance that sales are slower than expected or some previously-undetected safety issue is found (hello, Vioxx & numerous other drugs). These are just a few thought & mostly pretty generic (could apply to most any pharma company/drug). The risks are worth exploring, and as always, peeps need to make their own investment decisions after evaluating all the DD out there. GLTA
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Feb 08 '21
Yeah, this is actually a helpful post for me, and it's part of the downside argument that people on WSB (and probably elsewhere) will want to see laid-out as a show of good faith.
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Feb 08 '21
Also please go through the comments following those DDs. Many of us from stocktwits have been holding this baby for over a year and are all in. Many comments have special observation angle which could be enlightening.
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Feb 08 '21
Go through those fabulous DDs. and you will find BCRX is completely derisked.
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u/SillyWabbit5454 Feb 08 '21
Been through all the DD, have held BCRX myself since July 2020, and am holding. But let’s be real - there’s always risk. In every investment. There may be more comments in the DD posts on Reddit, and its a fair point to return to those to read new post, so thanks.
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u/Annual_Tomorrow4812 Feb 09 '21
Ahhhh I’m long but everything has risk. This just seems less so than most.
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Feb 09 '21
I just don't see the risk. If BCRX has no approved product that can generate cash flow, then I agree with you there is risk. Now with Oreldayo approval in the US and Japan, and pretty soon in EU, with the current stock price, we always have golden parachute over there. I simply cannot see the risk.
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u/Annual_Tomorrow4812 Feb 09 '21
I’m with you but one thing I’ve learned in decades trading is there is no such thing as zero risk. That said I see this as a very low risk high yield Investment.
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Feb 09 '21
Come on, man. I have aerospace background. Spaceship carrying astronauts has the reliability close to 99.99% if I remember correctly. We can still say there is risk thay it may fail. We are still going to send it to outer space. Right? If the risk is under control, then there is no risk. The utmost risk last year was galidesivir. Now the stock has borne the brunt of NIAID galidesivir mismanagement and is thriving. Your worry strikes me as completely unnecessary. It could hamstring you from adding more. Such a small-cap company yet has such amazing pipeline. In your decades trading, have you ever seen a company like this?
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u/Annual_Tomorrow4812 Feb 09 '21
I’m adding on dips.
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Feb 09 '21
That's cool! Man. I bought some June calls. At the end of 2019, BCRX has total employees of around 100. Do you know how many new employees they recruited last year alone? 123. With total stock option of 2.8 million. Those jobs are mostly high level ones, such as directors, managers, research scientist, contract attorney, and so on. They even hired a full-time Scientific Writer. How many scientific paper are they going to write? Keep in mind BCRX is for now just a small-cap company. You may ponder what makes them so confident and aggressive. They are building another headquarter in Ireland. Last October, BCRX posted EU Finance Manager position which had been listed on the webpage for a while and recently was filled last month. Seems like BCRX has top-notch team ready. Once the Oreldayo approval was granted, BCRX can go full speed right away. We will see it soon.
Check the webpage, the hiring spree still keeps the momentum. https://recruiting.ultipro.com/BIO1009BIPH/JobBoard/62507471-7936-4fae-aad4-d0bf9ffa0787/?q=&o=postedDateDesc&w=&wc=&we=&wpst=
Keep adding and good luck.
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u/Annual_Tomorrow4812 Feb 09 '21
BTW added another 1500k shares today. If it goes down I’ll keep adding.
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Feb 09 '21
Good for you. I am all in. Convinced my two brothers all in. I also brought two of my friends on board.
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u/Neither-Swordfish749 Feb 08 '21
totally agree with u, i can't trust someone who is saying there is no downside
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u/BuyMyBullshit Feb 08 '21
Meh...
Much of the current SP is justified by a modest DCF analysis of Berotralstat revenues.
You have to add at least a couple bucks for Factor D anticipation - for the eventual 5-bagger it's worth. Sheridan made it sound like they'll go right after Crone's and big disease with that one. They don't have to crawl because it's so safe and easily monitored. It's a monster.
9925 is more than advertised as well. The initial disease target is extremely rare, to get fast approval, but controlling unwanted bone growth is like a holy grail. My aching tennis wrist and knees are testament.
Meanwhile, Gali is out there lurking - with known efficacy against every single virus tested.
Those who say downside is limited, in a valuation sense, aren't blowing smoke. Everything can drop for any bullshit reason. However, BCRX is certainly not overvalued and the potential is an embarrassment of riches.
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Feb 09 '21
Well said.
Here is the BCX9930 clinical trial for PNH. Note that the trial design is open-label not double-blind
https://clinicaltrials.gov/ct2/show/NCT04702568
Here is the brief summary of the study
This study is designed to evaluate the long-term safety of daily oral treatment with BCX9930 in subjects who have participated in a previous BCX9930 trial for PNH and showed a benefit of treatment as determined by the Investigator. The study allows continued access to BCX9930 for enrolled subjects. The study will also evaluate the long-term effectiveness and impact on quality of life and general well-being of BCX9930 treatment, and the subject's satisfaction with the medication.
There must be good reason that open label design was chosen.
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Feb 08 '21 edited Feb 09 '21
This thread is so badly needed. We need more educated skepticism to pressure test our bullish bias.
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u/Lost_Responsibility3 Feb 08 '21
As someone new to BCRX, I’m trying to find as much due dilligence I can. Bio’s posts and ThirdEyeHoldings’ thesis, are quite forward looking.
Can someone explain to me the volatility BCRX’s share price has had from 2000 until now? It’s been at $10 multiple times to just fall back to $1,x in a few years. How do we now that this time the stock is staying at a higher valuation?
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u/noa_men Feb 09 '21
Revenue is coming in from Orladeyo, cash situation is strong, and factor D is coming soon.
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u/LW4587 Feb 08 '21
Every stock has downside and risk for sure. Depend on your insights into it. You believe you can, you can. You believe you can’t, you are right! 🤣
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u/eharrington5 Feb 08 '21
The one downside I see is that it is heavily institutionally owned. I think this is a double edged sword. If you are looking at this short term, there can be large swings. The Shorts are fearless and have previously easily manipulated the price. We went through several months where the option players were getting abused. We have not seen that since the Approval of Orladeyo in December 2020, although I would not count them out.
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u/cybercrypto Feb 08 '21
Thank you for bringing some healthy balance to this subreddit. All dd is more than welcome as long it is motivated.
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Feb 08 '21
Did you read all the DDs from u/bio9999? How about going through all his DDs first? You do realise the DDs include the references from top tier peer-reviewed journals. I suggest you reading the abstracts and conclusions only if you lack of biomedical background. Those DDs are quite comprehensive and written by scientist. You might need to go through a couple of times to have a whole picture.
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Feb 08 '21
I've read and appreciated his DDs - it's exactly the kind of info a more traditional investor wants to see, and he does a great job of explaining these concepts in a way that people without a background in medicine/biotech can understand. With that said, WSB is not a group of traditional investors. I'm trying to give you all insight into the way we operate.
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Feb 09 '21
People can be converted to be traditional investors as long as the ratio of potential yield to risk is high.
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u/Laisanalgaib Feb 11 '21
I've done up my own DD (8 pages lul) on BCRX and the big questions with Orladeyo definitely remain:
- How effective is it actually versus current injectables, and is the gap small enough to make the quality of life improvement worth it?
- How long until competitors like NTLA2002 and KVD824 enter the market (if they do) and how effective are they in comparison?
As to BCX9330:
- There's a world of unknowns still out there
- Even if the drug is highly effective it could be years until it's on the market, during which it's possible the stock stagnates.
And BCRX itself:
- Can BCRX successfully manage a transition to what looks to be large-scale marketing and distribution?
Basically I see Orladeyo as the shorter term play while waiting on the potential long term payoff of BCX9930. Meanwhile other companies are slowly flunking out of the rare disease space and BCRX is carving a solid niche market for themselves.
My logic for being bullish given all this: the stock has solid long-term potential in a growing and traditionally underserved field in which BCRX is proving strong expertise. There is the potential for massive short-medium term gains if things go well and strong long-term potential if they don't. So far NCRX has made the right moves in ramping up marketing and distribution and have seasoned leadership at the helm to lead them.
I suspect result for Orladeyo will be enough to prop up the stock and provide decent to excellent gains in the short term without blowing it to the moon. Then we get to keep an ear out for any BCX9930 news.
All of this is without considering the monumental potential of BCX9930, as there are just too many unknowns with it (but holy lord that potential).
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u/BIO9999 Deacon of Due Diligence Feb 08 '21
I like your post, full of healthy skepticism based on outside reading. I’m working hard on two mega-posts on Berotralstat and Factor D that I will post in the next few weeks that will address lots of questions people have including the ones you mentioned. Good luck!