BioCryst Makes A Small Recovery Following Last Year's Bad News Print
By Brian Wilson, Lead Contributor   
Wednesday, 16 January 2013 00:28
After a string of bad news that dropped BioCryst Pharmaceuticals (NASDAQ: BCRX) by over 60% last year, we see that the stock is having trouble gaining any serious traction from buyers.

Due to the low price per share that BCRX ended at in 2012, it was actually very easy for the stock to see over 30% appreciation since the start of 2013. Nonetheless, the company is struggling (and will continue to struggle) from the huge disappointments from 2012.

The first major disappointment was announced on October 30th 2012, regarding BioCryst Pharmaceuticals' IND (Investigational New Drug) application for BCX 5191, a nucleaoside analog inhibitor of HCV RNA polymerase (NS5B) for the treatment of Hepatitis C. This application was supposed to allow BCX 5191 to begin clinical development, but the FDA had it withdrawn due to the biologic's toxicity profile at effect levels of dosage.

This caused some controversy and led many people to believe that BCX 5191 was already dead, although it seems that BioCryst believes in the compound and hasn't suspended development yet. This is due to their confidence that the biologic has a chance of being effective against HCV at lower doses, which would allow the FDA's concerns about the biologic's toxicity to be less of a concern.

BioCryst took another hit a few days later after the company released interim analysis of the phase III trial for Peramivir for the treatment of serious cases of influenza. The results were very poor indeed. Researchers noted that the results between Peramivir and control groups were very small (not enough to be statistically significant). The independent data monitoring committee (DMC) that was in charge of the evaluation of the trial's data recommended that the study should be terminated due to futility. Although there were no noticeable problems with Peramivir's safety profile, the biologic was simply not working.

The company was hit yet again by another piece of bad news regarding their intended merger with Presidio Pharmaceuticals. On November 30 2012, it was announced that the deal was off. Most would consider this bad news for BioCryst due to the financing that the company would have received in the merger process.

It's easy to understand why BCRX can't find buying momentum following these three announcements. The company essentially lost two out of the four compounds it had left in its pipeline, and lost a lot of respect from shareholders in the process.

BCRX shareholders now have Ulodesine, and BCX4161 to justify the company's valuation. We can also see that the company has $43 million in cash, which should take the company through another year of operation without need of additional financing. Forodesine, another part of BioCryst's pipeline, would have been an interesting additional as well had it not been licensed worldwide to Mundipharma in 2011.

Biocryst is still trading at a market capitalization of about $96 million now, and has seen some strength after the turn of the new year. I think that the company will be looking for partnerships this year as the remainder of its pipeline continues along clinical development, which could make BioCryst an interesting play based on milestone payments. An acquisition would be great for BioCryst and its shareholders, although it might be hard to find a buyer for a company that saw two of its drugs fail within the last three months.

There could be value in BioCryst if the gout treatment Ulodesine or hereditary angioedema  BCX4161 surprise us, although its worth noting that BCX4161 is just emerging out of preclinical development. The only therapy that could feasibly add value for BioCryst in an acceptable timeframe is Ulodesine. While gout is a very common condition that leaves plenty of theoretical market penetration potential for Ulodesine, I don't think that the drug will be able to carry BioCryst without a struggle (if at all). The worst part is that even if Ulodesine performs extremely well in clinical trials, BioCryst would have to secure financing in order to pay for Ulodesine's launch. There's a good chance that this financing would come at the expense of shareholders.

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