Avian Flu May Not Be Just for the Birds

09/27/2007 12:00 am EST

Focus:

Michael Murphy

Former Editor, New World Investor

Michael Murphy, editor of New World Radar Report, says a new drug now in clinical trials may offer some relief if there are wider outbreaks of avian flu among humans.

At the end of August, researchers at the Fred Hutchinson Cancer Research Center confirmed human-to-human transmission of H5N1 (avian flu) between eight people within a family in Indonesia. All but one died, suggesting that this mutation was even more virulent.

Last week, the World Health Organization warned China and other Asian nations: "Despite efforts to control outbreaks, H5N1 has become deeply rooted in domestic birds, making it difficult to control the spread of the virus."

 [And as our own] Center for Disease Control says:

"If H5N1 viruses gain the ability for efficient and sustained transmission among humans, an influenza pandemic could result, with potentially high rates of illness and death worldwide."

We do not need a pandemic to make money [from any avian flu outbreak.] BioCryst Pharmaceuticals (NASDAQ: BCRX), which announced some bad news recently [and saw its] stock clobbered, [makes] peramivir, which is in Phase II trials as an intramuscular injection for seasonal flu and, separately, as an intravenous drip for hospitalized avian flu patients.

The company just announced preliminary results for the intramuscular seasonal flu trial. This was a randomized, double-blind placebo-controlled dose ranging study in 313 patients with confirmed flu, testing both a 150-milligram and a 300-milligram single injection of peramivir to reduce the duration of symptoms in seasonal flu.

[In a small subgroup of patients that got a meaningful amount of the drug], peramivir showed an improvement of 44.6 hours over placebo at the 150-milligram dose and 64.8 hours at the 300-milligram dose. The 2.6-day improvement seen at the 300-milligram level would have been very statistically significant if that arm of the whole study had shown similar statistics.

The company plans to run a quick 40-person test in the fourth quarter, and then start their Phase III program on schedule by year end.

While suspending judgment on the intramuscular program, I don't think these results impact the intravenous avian flu program at all, which is what I care about. Obviously, peramivir has a positive impact on flu, and intravenous administration gets a heck of a lot more drug into a person than a shot. I still think the Phase II intravenous trial will be successful, and the company will book $500 million to $700 million in government stockpile sales by 2010.

But I also realize that if the 40-person test is not successful and BioCryst has to abandon the seasonal flu indication, the stock could get hit again. So, I am reducing my buy limit to $13-still far above the current price. But I am not changing my target price [of $30], which reflects a successful avian flu drug, plus [other drugs]. (BioCryst closed Wednesday below $7.50-Editor.)

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