What happened

Shares of BioCryst Pharmaceuticals (BCRX -0.18%) rose more than 20% today after an SEC filing revealed that Millennium Management has acquired a 5.6% stake in the company. The capital management firm wields a portfolio weighing in at approximately $38 billion in total assets and seeks out "opportunistic" investments.

Investors are interpreting the newly disclosed equity stake as a vote of confidence in BioCryst Pharmaceuticals, which saw its shares collapse after reporting successful results in a phase 3 trial that weren't considered successful enough. Shares are down 57% since the beginning of 2019 -- and that includes the stock's 15.1% gain as of 1:47 p.m. EDT.

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So what

On May 21, BioCryst Pharmaceuticals announced late-stage results for an oral formulation of BCX7353 as a prevention of hereditary angioedema (HAE) attacks. The only other treatments available today are administered via injection, so an oral drug could have a big advantage in terms of convenience if it delivered on safety and efficacy. Unfortunately, while BCX7353 demonstrated a significant reduction in the rate of HAE attacks compared to placebo and met the primary endpoint of the phase 3 study, injectable drugs on the market today offer far superior reductions. Therefore, the drug candidate has little hope of competing in the market.

Now what

What could Millennium Management see in the company? That's a good question. The most advanced clinical program outside of HAE is in phase 1 development. It ended March with $107 million in cash on hand. Therefore, unless the capital management firm sees something in the clinical data others are missing, it seems to simply be betting on a rebound for the stock. Individual investors might find their money is better parked elsewhere.