What happened

Shares of the orphan drug specialist BioCryst Pharmaceuticals (BCRX -1.89%) gained as much as 14.4% on sky-high volume in early morning trading on Thursday. The catalyst?

BioCryst's shares are responding positively to a planned secondary offering that reportedly stands to generate $50 million in gross proceeds for the company. In addition, the company noted that the underwriters behind this offering have a 30-day option to purchase up to another $7.5 million worth of common stock. As of 1:35 p.m. EDT, BioCryst's shares were still up by a healthy 11.2% in the wake of this news. 

A man in a business suit drawing an upward trending curve with his index finger.

Image Source: Getty Images.

So what

Normally, biotech stocks crater after a sizable secondary offering like this one. BioCryst, however, is proving to be a noteworthy exception to this general trend. That's because investors are apparently relieved that the company is raising the capital necessary to move away from the idea of merging with other struggling biotechs, and instead, taking a go-it-alone approach.

Last month, after all, BioCryst's shareholders voted against a proposed merger with fellow small-cap drugmaker Idera Pharmaceuticals (IDRA). This capital raise was therefore the obvious next step for BioCryst after its shareholders nixed the merger with Idera. 

Now what

Capital raise aside, BioCryst's shares are still an ultra-high-risk investment. The company's lead clinical candidate BCX7353 -- an oral drug to treat hereditary angioedema (HAE) -- doesn't appear to have much of a chance at carving out a profitable niche in this increasingly crowded space, after all.

BioCryst lacks an obvious star in its current clinical pipeline, which is one of the main reasons management was interested in merging with Idera in the first place. This capital raise also won't give the company the financial flexibility necessary to add any assets to its pipeline. As such, investors may want to steer clear of this speculative biotech for the time being.