Double-Edged Potential

12/29/2006 12:00 am EST


Michael Murphy

Former Editor, New World Investor

Always searching for the next trend to benefit investors, in his latest issue, cutting-edge wizard Michael Murphy recommends a company poised to gain from two diverse areas: The potential bird flu pandemic as well as more mainstream diseases...

"I still think it is inevitable that bird flu will be found in the US, and that it will mutate into a strain that is easily transmitted from person to person. Both of those things could have happened in 2006 and are even more likely to happen in 2007. But as I've been saying, neither has to happen for us to make a lot of money in the stocks, as government demand to stockpile antivirals and vaccines drives up revenues.

"BioCryst (BCRX NASDAQ GM) reported Fodosine data from three trials at the American Society of Hematology (ASH) annual meeting recently, and the news was good. Fodosine treats certain types of leukemias and lymphomas. The first results were from a mid-study look at a Phase I/II trial of oral Fodosine for refractory (not responding to treatment) cutaneous T-cell lymphoma. Of the 34 patients evaluated, 14 had partial responses and three had complete responses, for an overall response rate of 50%. Those are good numbers for advanced lymphoma, and the safety data was good, so BioCryst will now start a Phase II trial.

"The second trial was a Phase II study of patients with clinically active relapsed (it came back), refractory T-cell leukemia. Nine of the 50 patients had a complete response--a remarkable result. Even better, Fosodine restored normal blood cell development during the treatment, which means it may be useful as a targeted, less toxic therapy to treat the disease. BioCryst will do a "pivotal" Phase IIb trial, which means if it gets similar results, it will file for approval.

"The third trial was a Phase I safety study for relapsed, or refractory, B-cell acute lymphoblastic leukemia. As usual, the safety data was fine, and with some evidence of positive activity. Phase I trials are too small to say much more than that, but the company said that it intends to continue trials with Fodosine for this indication.

"While I think the stock is worth more than its current price just based on its avian flu potential, there's a lot more going on here. BioCryst is the best-situated stock in this MegaShift to make us a lot of money in 2007, as the company completes its Phase II clinical trials of peramivir for both seasonal and avian flu. BCRX is a top buy all the way up to $19 for my $30 target."

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