Seeking Alpha
Research analyst, long/short equity, dividend investing, ETF investing
Profile| Send Message|
( followers)  

I rarely if ever write about stocks I recommend in my service. This is a point-and-shoot blog -- I point, you shoot -- but today I want to discuss a company I had recommended and just closed, BioCryst (NASDAQ:BCRX).

Many people may look at the stock, and its chart, and its cash position, and say maybe. I say no. BCRX is a cancer and pandemic flu company. The cancer treatment, Fodosine, and the flu drug, peramivir, have serious promise, but management is the problem.

The president of BioCryst, Jon Stonehouse, came onboard about a year ago, inherited some ridiculous problems not of his making and brought in seasoned big-pharma vets to rectify the situation -- but so far is behind the curve in running a publicly held company.

This past summer peramivir failed to reach its primary endpoint in a Phase II trial because the morons designing the trial before his arrival chose the wrong size needle. If airlines are using larger seats, using needles too small to get through the typical modern-day big butt is an absurd mistake.

After this fiasco, Stonehouse and company were cool and calm and said the there were strong enough results within the trial patients they determined actually received the drug that they would proceed to Phase III. And then a couple of weeks ago they said nope, not ready to go to Phase III this flu season. Instead we're going to burn investors' money for another year.

That information should have been provided earlier and the comments stating the company was going forward to Phase III should never have been made.

This shows a lack of familiarity with running a publicly held company, and what is best called accidental arrogance -- a disease of many, perhaps most, big-pharma execs who are almost totally internally focused.

Do I exaggerate? A few weeks back I gave the closing keynote at a strategic planning conference for 150 big pharma execs. These were big-time, serious execs at the most senior levels of management of product development. After my remarks I was asked questions about Wall Street and shareholders my sons could have easily answered when they were first investing their own money in the market when they were 14. Letting these kind of execs loose to manage a development stage, publicly held startup such as BCRX is not a good idea.

Bottom line: BioCryst management is not a group you want to trust with your money. To date, BCRX execs have not shown enough respect for investors to earn that trust.

Source: BioCryst Management Needs to Earn Investors' Trust