No segment of the stock market is as sensitive to the news flow than the biotech sector. That is both a blessing and a curse as a stock’s trajectory can be sharply impacted entirely depending on whether the news is good or bad.
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Unfortunately for BioCryst (BCRX) investors, last Friday brought with it only the latter. Shares tumbled ~40% after the biotech company announced it was halting enrollment in three phase 2 trials assessing its experimental drug BCX9930. These include a couple of pivotal studies (REDEEM-1 and REDEEM-2) in PNH (paroxysmal nocturnal hemoglobinuria), and the RENEW basket study in three renal indications.
The company made the decision after seeing elevated serum creatinine levels in some patients; high creatinine levels can cause serious kidney damage. For now, according to management, patients already enrolled in the clinical trials will continue to receive BCX9930.
Following the news, Cantor analyst Brian Cheng spoke with some members of BioCryst’s C-suite, including the CEO and CCO. Cheng’s main takeaways are that the company paused the trial without regulatory intervention and that it is in talks with regulatory agencies, with the company “awaiting feedback.” The analyst added, “We did not get additional granularity on the timing and severity of the serum creatinine elevation.”
What Cheng did get, though, is a surprise regarding the nature of the news.
“In prior data releases from the Ph 1/2 study, renal-related events had not been flagged as a potential side effect of BCX9930,” the analyst explained. “The insights we have on the elevated serum creatinine levels are currently limited. While we maintain our positive view behind BCX9930 based on Ph 1 efficacy data in a handful of PNH patients, we believe it would be prudent near term to re-assess BCX9930’s position in the evolving oral drug market in PNH.”
The drug has a lot to prove now and Cheng believes that in terms of safety and efficacy, BCX9930 will have to show “clear differentiation” from other oral drugs currently being developed, such as Novartis’ Iptacopan and AstraZeneca’s ALXN2050. With data anticipated from both programs later in the year (pivotal for Iptacopan, and Phase 2 for ALXN2050), a positive readout could improve their positioning in the race to be the “first potential oral drug in the market.”
While Cheng still believes BioCryst’s “underlying fundamentals remain solid,” the analyst has reduced the price target from $20 to $17. Nevertheless, the new figure still suggests share appreciation of 35% in the year ahead. Cheng’s rating stays an Overweight (i.e. Buy). (To watch Cheng’s track record, click here)
Overall, BioCryst has a Moderate Buy rating from the Wall Street analyst consensus, based on 8 Buys and 3 Holds set in recent weeks. The stock is selling for $12.59, and the average price target of $19.10 implies an upside potential of ~52%. (See BCRX stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
