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McCamant Bets on Biotech Orphan

11/21/2003 12:00 am EST


John McCamant

Editor, Medical Technology Stock Letter

When it comes to analyzing biotechnology stocks, there is no more astute and well-connected analyst than John McCamant, editor of The Medical Technology Stock Letter. His latest buy recommendation is what he calls both "a fallen angel" and a stock that has been "abandoned by Wall Street." Here's his bullish review.

"BioCryst Pharmaceuticals (BCRX NASDAQ) is a biopharmaceutical company with a core competency in structure-based drug design.  Its lead drug candidate is BCX-1777, a small molecule inhibitor currently in Phase I/II clinical trials for acute refractory T-cell malignancies.  Roughly 50,000 patients have T-cell malignancies, meaning this drug will easily get both 'orphan' and 'fast track' drug status from the FDA. Its second drug candidate is BCX-3607, a small molecule that targets tissue factor VIIa,  an anti-coagulant and an anti-inflammatory. Initial indications include acute coronary syndromes, unstable angina, and coronary angioplasty. Dr. Eric Topol of the Cleveland Clinic, possibly the most notable investigator of interventional cardiology compounds, is leading the development of BCX-3607. The company is already in partnership discussions with stent manufacturers regarding this exciting drug candidate.

"BioCryst has virtually zero coverage from Wall Street for two reasons. First, the company is a fallen angel.  The company had a flu program partnered with Johnson & Johnson that did not survive Phase III and has worked hard since this disappointment to rebuild the company.  We believe that they have been successful in doing so.  The second reason is geographical, the company is located off the beaten path in Birmingham, Alabama, not exactly a biotech hotspot.  However, it is home to one our best teaching hospitals, the University of Alabama at Birmingham. BioCryst is a buy now. While it has been orphaned by Wall Street, we believe it offers excellent value at current price levels.  We fully expect Wall Street to resume coverage of BCRX next year, albeit, at a higher valuation. We are initiating coverage as a buy under $12 with an 18-24 month target of $25."

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