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More Than Avian Flu

01/27/2006 12:00 am EST


John McCamant

Editor, Medical Technology Stock Letter

Given its recent coverage in the media, many may be familiar with Biocryst as an avian flu play. While biotech expert John McCamant recognizes that potential, he feels investors are underestimating the firm's role in other promising areas. Here's his review.  

"BioCryst (BCRX NASDAQ) enjoyed a tremendous 2005. We believe, however, that this was just the beginning of what will be an extended, longer-term move upward. As a result, the company and their stock are poised for substantial growth in 2006. Most of the attention toward BioCryst has been focused on peramivir—the company’s potential treatment to combat avian flu.

"To be certain, we believe a number of factors suggest that peramivir is uniquely positioned to be the first choice when it comes to the US government’s Project Bioshield stockpiling drugs (not to mention other governments) to fight avian flu. This could provide significant short-term appreciation for BioCryst’s stock price.

"That said, we believe that investors are paying very little attention to the fact that, in addition to the peramivir program, BioCryst has three other legitimate, potentially lucrative development programs/compounds. These include their lead drug candidate, Fodosine, for the treatment of both T-cell and B-cell malignancies, BCX-4208, for the treatment of autoimmune/inflammatory disorders, as well as their exciting program devoted to the treatment of the hepatitis C virus.

"BioCryst recently delivered an outstanding partnership with Pfizer for the development of BCX-4208, providing the company not only valuable access to cash, but also excellent validation of the program. In addition, we expect that the company will get the go ahead shortly from the FDA to start pivotal-stage testing of Fodosine, and additional partnerships for the drug candidate, the HCV program, or both, are likely not too far off.

"Investors should keep in mind that even after the move the stock made last year, the company’s market cap is still barely over $500 million. In this regard, we would make the argument that the company continues to remain significantly undervalued even without the peramivir program factored in. In our opinion, BCRX is a buy under $20 with an 18–24 month target of $50."

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