Seeking an Answer to Avian Flu

06/05/2007 12:00 am EST

Focus:

Michael Murphy

Former Editor, New World Investor

Michael Murphy, editor of New World Investor, says the small biotech company BioCryst has a good potential therapy for preventing the spread of avian flu, plus other promising drugs.

Despite the Center for Disease Control's lack of preparation for an avian flu breakout, there is a company that's not sitting on its hands when it comes to fighting this deadly disease. BioCryst Pharmaceuticals (NASDAQ: BCRX) reported $9.2 million in revenues, up dramatically from last years $771,000, as they begin to recognize revenues from the $102.6 million federal contract that they won in January to develop peramivir for potential use in national stockpiles to treat infected citizens.

They have $42.8 million in cash, plus the rest of the $102.6 million contract. On [a recent] conference call, management said that the contract will carry peramivir all the way through clinical trials to a New Drug Application, with no dilution to current shareholders. Neat!

Last month, BioCryst reported positive results in a mouse study, in which 40% to 60% of mice infected with H5N1 survived after one or two injections of peramivir. All the mice that received two shots the day they were infected, plus one a day for the next seven days, survived.

Due to the mild flu season in North America, the company will continue the Phase II trials for intramuscular peramivir in South America, Southeast Asia, and Australia/New Zealand. Assuming all goes on schedule, they'll be able to start Phase III trials for the intramuscular version in the fourth quarter of this year. BCRX pointed out that a single shot of peramivir quickly enters the patient's systemic circulation, quickly achieves high concentrations in the plasma, and blankets the virus. That kicks the flu virus hard, and should make peramivir an attractive therapeutic option.

BCRX will also move the Phase II intravenous trials for hospitalized flu patients to South America and Southeast Asia. Right now, there is no specific therapy for hospitalized flu patients, and in just the US we average over 200,000 patients hospitalized every year due to flu and its complications, with approximately 36,000 deaths per year. The company has designed these clinical trials in careful consultation with the FDA, as this is a serious unmet need.

The Fodosine program in cutaneous T-cell lymphoma is also progressing, as the FDA has now given comments on the company's draft version of an application for a Special Protocol Assessment (SPA). BioCryst is about to respond and thinks the pivotal Phase IIb trial can begin in the September quarter. As you may remember, under an SPA if you hit statistical significance, you get approval without any Dendreon-like surprises.

Everything is lining up for a great year for BCRX, which remains a Top Buy up to $19 for my $30 target. (The stock closed at around $8 Monday—Editor.)

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