In June 1995 the Company notified the FDA that it had submitted incorrect
efficacy data to the FDA pertaining to its Phase II dose-ranging studies of
BCX-34 for CTCL and psoriasis. The FDA inspected the Company in November 1995 in
relation to a study involving the topical application of BCX-34 concluded in
early 1995, and in June 1996 the FDA inspected the Company and one of its
clinical sites in relation to a Phase II dose-ranging study of BCX-34 for CTCL
and a Phase II dose ranging study for psoriasis, both of which were concluded in
early 1995. After each inspection, the FDA issued to the Company a List of
Inspectional Observations ("Form FDA 483") setting forth certain deficient Good
Clinical Practices procedures followed by the Company, some of which resulted in
submission to the FDA of efficacy data which reported false statistical
significance. The FDA also issued a Form FDA 483 to the principal investigator
at one of the Company's clinical sites citing numerous significant deficiencies
in the conduct of the Phase II dose-ranging studies of BCX-34 for CTCL and
psoriasis. These deficiencies included
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improper delegations of authority by the principal investigator, failures to
follow the protocols, institutional review board deviations, and discrepancies
or deficiencies in documentation and reporting. The Company received notice from
the FDA in November 1997 that work in support of products under FDA jurisdiction
performed by this investigator would not be accepted by the FDA without
validating information. Currently, the Company does not intend to pursue a
topical treatment for BCX-34, which is the clinical study this investigator
pursued for the Company. As a consequence of the FDA inspections and such
resulting Form FDA 483s, the Company's ongoing and future clinical studies may
receive increased scrutiny; this may delay the regulatory review process or
require the Company to increase the number of patients at other sites to obtain
approval (which can not be assured on a timely basis or at all). The Company has
adjusted certain of its procedures, but there can be no assurance that the FDA
will find such adjustments to be in compliance with FDA requirements or that,
even if it does find such adjustments to be in compliance, it will not seek to
impose administrative, civil or other sanctions in connection with the earlier
studies.
Such sanctions or other government regulation may delay or prevent the marketing
of products being developed by the Company, impose costly procedures upon the
Company's activities and confer a competitive advantage to larger companies or
companies that are more experienced in regulatory affairs and that compete with
the Company. There can be no assurance that FDA or other regulatory approval for
any products developed by the Company will be granted on a timely basis, or at
all. Delay in obtaining or failure to obtain such regulatory approvals will
materially adversely affect the marketing of any products which may be developed
by the Company, as well as the Company's results of operations.
HISTORY OF OPERATING LOSSES; ACCUMULATED DEFICIT; UNCERTAINTY OF FUTURE
PROFITABILITY
BioCryst, to date, has generated no revenue from product sales and has incurred
losses since its inception. As of March 31, 1999, the Company's accumulated
deficit was approximately $55.6 million. Losses have resulted principally from
costs incurred in research activities aimed at discovering, designing and
developing the Company's pharmaceutical product candidates and from general and
administrative costs. These costs have exceeded the Company's revenues, which to
date have been generated primarily from collaborative arrangements, licenses,
research grants and from interest income. The Company expects to incur
significant additional operating losses over the next several years and expects
such losses to increase as the Company's research and development and clinical
trial efforts continue. The Company's ability to achieve profitability depends
in part upon its ability to develop drugs and to obtain regulatory approval for
its products that may be developed, to enter into agreements with collaborative
partners for product development, manufacturing and commercialization, and to
develop the capacity to manufacture, market and sell its products. There can be
no assurance that the Company will ever achieve significant revenues or
profitable operations.
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