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We've been seeing a lot of new activity in BioCryst Pharmaceuticals (NASDAQ: BCRX), which we last covered on April 7th following a 42% run in the stock chasing the good news that the company received from the FDA about its antiviral agent peramivir. The program, which was presumed to be dead after suspension of its phase III trial in November 2012 due to futility, received a second life when the FDA decided to arrange a meeting with the company to discuss a possible path towards an NDA submission.

It seems that the FDA agrees with the notion that the phase III trial was set up to be a failure due to its design, and that peramivir has demonstrated its worth as an antiviral agent in previous situations. While many drug development programs never survive a Phase III failure, peramivir seems to be a very special case.

BioCryst really needed the good news after the withdrawal of the IND application for BCX5191, and a failed attempt at a merger with Presidio Pharmaceuticals which raised major concerns about the company's prospects going forward.

Now that confidence has been restored in the neuramindase inhibitor peramivir, investors are trying to gauge how much the drug could be worth based on the market success of Tamiflu (oseltamivir) and Relenza (zanamivir). While the method of peramivir's delivery is different (it is an IV formulation), some evidence suggests that it may be particularly efficacious against strains of bird flu despite a similar mechanism of action.

This was why the drug was temporarily approved and utilized in the bird flu outbreak of 2009 in Asia. Looking back, we can see that the hype over peramivir caused an enormous rally in shares of BioCryst, sending the company well above $10/share as investors attempted to chase what seemed to be a best-in-class antiviral agent. Although it wasn't proven in clinical trials, some still believe that peramivir could be the best neuramindase inhibitor out there.

H7N9, which is the most recent strain of bird flu, has caused a lot of recent interest in BCRX as investors remember how high the stock went in 2009. As described in an update on April 8th, 2013, the H7N9 virus infected at least 26 people at that point and killed at least 6. Between then and now, infections have risen to at least 108 and the death toll has risen to 22. Even more terrifying to Asian governments is the confirmation that the virus has spread to Taiwan, according to commentary given by the World Health Organization.

Not only are they struggling to determine the source of the infection, but they have confirmed that it is an "unusually dangerous virus for humans" and that "more easily transmitted from poultry to humans than H5N1". H5N1 was the strain of bird flu that claimed 332 lives between 2004 and 2007.

While BioCryst is unlikely to see financial benefit in the event that China, Taiwan and other nations stockpile peramivir in reaction to the H7N9 outbreak, it's possible that investors may bid up BCRX (again) in anticipation of a repeat of the run-up we saw in 2009. This may also put pressure on the FDA to approve peramivir through some alternative route, although we will see the details on this matter after BioCryst holds and reports the results of its pre-NDA meeting.

The Takeaway

Investors should realize that BCRX is a very news-driven speculative stock right now that will remain volatile and quite unpredictable as more news trickles in from Asia about the spread of H7N9 and the infection rates, as well as the death toll. If these rise, expect more bullish speculation on this particular ticker. Also note that Peramivir's US development program was "brought back from the dead" with the FDA's pre-NDA meeting which will (hopefully) provide a path towards FDA approval for BioCryst. Depending on the results of this meeting, BCRX should either move up (or down) quite violently, as this is the company's "flagship" development program.

Source: BioCryst Heats Up: H7N9 Virus Hits Taiwan, Fatalities Up Nearly 300%