What happened

Shares of BioCryst Pharmaceuticals (NASDAQ:BCRX) are up 13% at 2:09 p.m., continuing a two-day run that's seen its shares increase 36% since the close on Thursday. It appears investors are excited about the prospects for its antiviral galidesivir as a treatment for COVID-19, the disease caused by the novel coronavirus.

So what

BioCryst has started testing galidesivir in a placebo-controlled study in Brazil that will evaluate three different doses of the drug in a total of 24 patients with moderate to severe COVID-19. Once the best dose is found, up to 42 patients will be enrolled in the expanded group.

Patient and doctors behind a sign that reads, "Caution, outbreak alert"

Image source: Getty Images.

BioCryst is more than just a play on COVID-19. The company has developed berotralstat for patients with hereditary angioedema (HAE), an inherited disease characterized by episodes of severe swelling. The drug is under review by the Food and Drug Administration, the Pharmaceuticals and Medical Devices Agency in Japan, and the European Medicines Agency.

Investors may be jumping in ahead of potential approvals in Japan (sometime in the second half of this year), the U.S. (likely on or before Dec. 3, 2020), and the EU (likely in the first half of next year). Although with multiple drugs available to treat HAE, BioCryst's sales force will have its work cut out for it.

Now what

At a market cap of $820 million, BioCryst Pharmaceuticals isn't particularly expensive; a few hundred million in sales of berotralstat would justify the valuation.

But investors should keep an eye on the company's cash runway. With a nest egg of just $114.6 million at the end of the first quarter and a plan to spend at least $100 million more this year, BioCryst will need to raise additional capital through a secondary offering, licensing one of its pipeline drugs, or perhaps a royalty financing for berotralstat before the biotech can grow into its current valuation.