What happened
Shares of BioCryst Pharmaceuticals (BCRX -1.19%) were up by a healthy 14% as of 1:40 p.m. ET Wednesday. The big gain came after the small-cap biotech reported first-quarter earnings ahead of the opening bell.
Although it missed Wall Street's consensus top-line estimate by $2.6 million for the quarter, investors appear to be more concerned about BioCryst's overall financial health and near-term outlook.
So what
BioCryst said that in Q1, the number of U.S. patients taking its oral hereditary angioedema (HAE) drug Orladeyo rose by 46% year over year. Meanwhile, its research and development expenses plunged by 26% due to the discontinuation of its BCX9930 and BCX9250 programs.
What's more, BioCryst secured $450 million in financing in April via a loan agreement with Pharmakon. Management said the funds will be used in part to pay off a debt to Athyrium, as well as for general corporate purposes.
From the perspective of current shareholders, this loan agreement is arguably a much-preferable way of gaining access to funds than, for example, a dilutive secondary stock offering. BioCryst's stock, after all, is still down by a whopping 43% from its 52-week highs, so this isn't exactly the best time to issue additional shares.
Now what
Is BioCryst's stock still a buy? The good news is that Orladeyo appears to be capturing market share in its indication at a breakneck pace. Even so, BioCryst's story is likely to remain heavily dependent on this drug's commercial performance for years to come. That doesn't mean that the biotech can't be a winning pick for investors, but there are risks associated with such a heavy degree of revenue concentration. BioCryst stock, therefore, is arguably more suitable for those who are comfortable with that level of risk.
