Shares of BioCryst (BCRX -6.47%) have climbed by around 180% since the company's first rare-disease drug earned FDA approval in December. And another potential blockbuster rolling through the company's pipeline has the potential to be an even bigger winner.

Yet despite strong gains over the past six months, BioCryst's market cap is still lower than the market caps of many clinical-stage biotech companies. Is this drugmaker positioned to keep delivering big gains for investors, or is its stock cheap for a good reason?

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Why BioCryst stock is soaring

In December, the FDA approved Orladeyo, a once-daily capsule to prevent painful swelling episodes caused by a rare immune system disorder called hereditary angioedema (HAE). Patients with HAE experience random swelling episodes that are usually limited to their limbs and face, but sometimes, they can cause severe pain when they occur in the intestines. On occasion, swelling episodes that constrict patients' airways can be fatal.

HAE patients need prophylactic treatments like Orladeyo that can safely be taken regularly for years or even decades. Despite competition from existing HAE treatments like Takhzyro from Takeda (TAK -1.55%), BioCryst reported an encouraging $11 million in sales during Orladeyo's first full quarter on the market.

Since Takhzyro earned regulatory approval in 2018 as a treatment to prevent swelling attacks in HAE patients, the drug has been a big hit for Takeda. During the first three months of 2021, sales of the injection reached an annualized rate of $3.2 billion. So for BioCryst, capturing just a fraction of the addressable patient population for Orladeyo would amount to enormous sales growth.

In the second half of 2021, BioCryst will begin a pivotal trial of BCX9930, a new drug candidate for the treatment of paroxysmal nocturnal hemoglobinuria (PNH). In March, results from an early-stage study of BCX9930 showed significantly increased levels of hemoglobin for PNH patients, suggesting it could become the first oral treatment for PNH. 

If BCX9930 is approved to treat PNH and related disorders, it could be a blockbuster for BioCryst.  Soliris and Ultomiris, which AstraZeneca (AZN -0.75%) acquired from Alexion earlier this year -- and which are also treatments for PNH and other blood-based immune-system disorders -- generated a combined $5.1 billion in revenue in 2020.  

Why BioCryst hasn't climbed much higher

There's a lot of competition for HAE treatments, and the clinical data we've seen so far for Orladeyo is arguably inferior to that of Takhzyro. As an easy-to-swallow capsule, Orladeyo has some potential to differentiate itself from competing drugs -- but perhaps not for much longer. In February, KalVista (KALV -1.74%) reported positive results from a phase 2 trial of KVD900, an orally available treatment candidate for acute HAE attacks.

As an acute HAE treatment, KVD900 won't compete directly with Orladeyo, which aims to prevent attacks. Unfortunately for BioCryst, KalVista is also developing a prophylactic HAE treatment dubbed KVD824 that could end up competing directly with Orladeyo. Kalvista's success with KVD900 so far suggests that there's a good chance KVD824 will become a thorn in BioCryst's side in the future.

Time to buy

Selling small-molecule drugs that can be doled out by pharmacists the old-fashioned way is relatively easy compared to selling treatments that need to be infused or injected. Engineering new small-molecule drugs that can alter the function of a specific protein, though, is a multidisciplinary challenge. 

There aren't a whole lot of companies with the proven ability to do what BioCryst has already accomplished, and none trade as cheaply. At the moment, the company sports a relatively modest $2.5 billion market cap despite having one drug that has earned regulatory approval and another potential blockbuster in the pipeline that's advancing into late-stage development.

BioCryst finished last quarter with $227 million in cash and equivalents on the books, after losing $64 million during the period. If the company can't encourage investors with more successes from its BCX990 program or begin to make ends meet with Orladeyo sales before operations eat through its cash cushion, the stock could take a tumble. Shares of BioCryst are probably worth the risk at the moment, but only as a small part of a well-diversified portfolio.