What happened

Shares of BioCryst Pharmaceuticals (NASDAQ:BCRX) rose over 21% last month, according to data provided by S&P Global Market Intelligence. In the beginning of the month, the company announced the successful sale of 10.4 million shares that raised around $57.5 million in gross proceeds.

While dilution is generally not met with excitement, investors were supportive of the infusion of capital. That's mainly because it allows BioCryst Pharmaceuticals to abandon its idea of merging with Idera Pharmaceuticals, which Mr. Market was not thrilled about. Shares have now gained nearly 70% since the beginning of 2018.

A woman checking her phone and pumping her fist in excitement as cash money falls around her.

Image source: Getty Images.

So what

BioCryst Pharmaceuticals will need plenty of cash to continue developing its pipeline that's led by BCX7353. The drug candidate is being investigated as the first oral treatment for hereditary angioedema, a rare genetic disease that can cause sudden swelling of the face, hands, feet, and throat. It's currently in a phase 3 trial formulated as a capsule and in a phase 2 trial formulated as a liquid.

But development efforts have been expensive. BioCryst Pharmaceuticals reported a net loss of $44 million in the first half of 2018 and expects cash burn of $85 million to $105 million for the full year. While the company exited June with $114 million in cash and cash equivalents, the extra capital from the share offering will further bolster its financial position.

Now what

The company didn't waste time keeping the momentum going in September. Since the beginning of this month, investors have learned of positive results from an ongoing study of BCX7353. That will likely be added to any regulatory submission along with phase 3 trial data, and that BioCryst Pharmaceuticals earned a five-year, $35 million contract from the Centers for Disease Control to create a stockpile of its antiviral flu therapy. The company appears to be firing on all cylinders right now, but with an $800 million market cap and a long way to profitability, investors should tread carefully with this pharma stock.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.