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BioCryst Pharmaceuticals, Inc: The Best Performing Biotechs of 2013

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With the Nasdaq Biotechnology Index up 65% since the start of the year, it's clear that the biotech sector performed extraordinarily well in 2013-but which stocks were the biggest winners? Several small-cap and mid-cap biotech companies posted returns of 200% or more through the middle of December this year, and, in this series, I review the 15 biggest movers of 2013. Let's continue this review with number 6 on the list, BioCryst Pharmaceuticals, Inc. (NASDAQ: BCRX  ) . While some argue the future of small molecule drugs will be eclipsed by biologics, BioCryst remains unfazed. It's working on a host of small molecules addressing everything from the flu to cancer.

Advancing mid and late-stage compounds

BioCryst's focus is on infectious diseases, such as influenza, for which the company is developing peramivir, and inflammatory diseases such as gout, for which BioCryst is working on ulodesine.

The demand for peramivir, which halts an enzyme key to flu's survival, isn't likely to be big. It's a drug much like Tamiflu, however it's designed to be delivered via IV rather than inhaled or taken orally. The IV dosing puts it more into competition against an IV version of GlaxoSmithKline's (NYSE: GSK  ) Relenza.  Glaxo's IV version is currently in development and the company provided insight into phase 3 use in September. 

Both peramivir and Glaxo's IV Relenza were dosed during the 2009 flu pandemic, with more than 1,200 patients receiving BioCryst's peramivir. That use made peramivir increasingly important to the U.S. Department of Health and Human Services, whose BARDA group serves as peramivir's de facto god-parent.

Subsequently, BARDA agreed this summer to release up to $12.8 million from its contract with BioCryst to fund the company's completion of the work necessary to submit peramivir for FDA approval by year end.

BioCryst also has another potential opportunity in oncology drug forodesine, which is being developed by partner Mundipharma. Mundipharma licensed global rights to the orphan drug in 2011, following somewhat tepid phase 2 results showing just an 11% response rate in patients treated with forodesine. If Munipharma can eventually find a market for the forodesine, BioCryst stands to receive tiered royalties on sales.

And ulodesine has shown promise as part of a combination therapy for gout in phase 2 trials. However, BioCryst has paused development in hopes of finding a partner to help pay for a phase 3 trial.

Up-and-coming drugs

Among BioCryst's earlier stage programs, its most promising includes BCX-4161 for hereditary angiodema, or HAE, and BCX 4430, for hemorrhagic fevers like Marburg.

In July, data released from a phase 1 study of BCX-4161 supports plans to move the drug into phase 2a. If the drug is successful in mid and late-stage trials and wins FDA approval, it would compete against ViroPharma's Cinryze. Despite HAE's rarity, Cinryze generated $102 million in Q3 sales for ViroPharma, bringing year-to-date sales to $290 million, and leading in part to Shire's (NASDAQ: SHPG  ) $4.2 billion acquisition of ViroPharma in November to bolster its rare disease portfolio.

Lacking money to burn

The funding release by BARDA to help BioCryst complete its NDA for the FDA and BioCryst's hold on moving ulodesine into phase 3 is a reflection of BioCryst's struggling balance sheet. The company had just $28 million in cash earlier this year and is guiding for cash burn of $22 million to $26 million in 2013. However, following news of the BARDA funding, BioCryst completed a $20 million stock offering which strengthens its ability to move emerging drugs through trials. 

Its cash stockpile got an additional pop in September when the allergy and infectious disease group in the National Institute of Health gave BioCryst $5 million up front as part of a deal that could be worth up to $22 million to develop BCX4430. All combined, those moves helped lift BioCryst's cash balance to $43 million exiting September, giving the company enough money to last through 2014.

Fool-worthy final thoughts

If BioCryst can win FDA approval for peramivir it could give the company incremental sales needed to advance promising and potentially more revenue friendly drugs, such as BCX-4161 for HAE, through trials. An eventual approval for BCX-4161, which won't happen soon, may be exciting investors following Shire's high profile buyout of ViroPharma.

However, the expense tied to human trials and the company's uncertain revenue stream presents questions. That makes BioCryst a highly speculative company, suggesting investors might want to wait and see how peramivir sales and BCX-4161 mid stage trials play out before investing.

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