Biocryst is using an intramuscular delivery system because a Phase III clinical trial using an oral (pill) formulation of peramivir, in June of 2002, showed that the primary endpoint did not reach statistical significance. The company believed that the low bioavailability of the oral formulation was the reason for the drug’s clinical response in the Phase III study.
In preclinical studies, peramivir has shown potent, broad-spectrum activity against multiple strains of flu, including avian influenza (H5N1). There currently are no drugs yet approved specifically to treat the H5N1 strain.
Peramivir is part of a class of antiviral agents that work by inhibiting viral neuraminidase (NA), an enzyme essential for the influenza virus to replicate and infect its hosts. NA also plays a role in the initial penetration of the mucosal lining of the respiratory tract. Relenza (zanamivir), an orally inhaled powder, and Tamiflu (oseltamivir), are the first of two registered neuraminidase inhibitors for the treatment and prophylaxis of influenza (B) currently available. There are currently 12 other patented, NA-inhibitors that are being investigated in other U.S. research labs.
Also helping the stock price of Biocryst was an article published in The NE Journal of Medicine that Tamiflu may not be completely effective in combating avian influenza. In other words, H5N1 Influenza Virus Resistant-strains to oseltamivir have been isolated. Ergo, peramivir is being received by investors to be the the next best thing for the flu since the invention of aloe-based tissues.
Experts are afraid H5N1 will mutate into a form that can be passed from human to human. Although data on the effectiveness of Tamiflu and Relenza on the H5N1 strain are scarce, stockpiling of the drugs has become part of worldwide preparations for a possible avian flu pandemic.
Investor giddiness over peramivir might be premature. Investors have embraced a premise that peramivir is more clinically and biologically effective than the two NA inhibitors on the market. There is no substitute for solid clinical results. To date, investors are jumping onboard because the drug has been shown to be safe, well tolerated, and effective in mouse influenza models! The world is not flat....and investors ought to be prepared for what lies beyond the horizon.
Penicillin and anti-microbial history have demonstrated that resistance is not limited to just one drug in a class. That is, peramivir works by the same mode-of-action as others in the NA-inhibitor class. If the bugs are biting back, it will only be a matter of time before H5N1 virus-resistant strains develop to peramivir, too. Since investors seem so readily to embrace pre-clinical data, they might want to note that, published data has discovered that mutant viruses--have already--displayed increased resistance to zanamivir, oseltamivir and peramivir, with certain viruses displaying cross-resistance to all three drugs.
Biocryst has no product in its pipeline further along than Phase II trials. To date, with no drugs on the market, Biocryst has financed its operations primarily from the sale of equity securities and, to a lesser extent, revenues from collaborations and interest. Given an expected monthly burn rate increasing to approximately $2.5 million, the 10Q Detective estimates that the Company has about 12-months before it will need to tap the equity markets again.
Biocryst's current valuation is approximately $531 million. Given the Company's limited history of discovery research, no developmental infrastructure to speak of, and an unknown advantage over a litany of other companies pursuing similar therapies, we do not find the current valuation compelling. One sneeze, and this stock could surprise investors with an ugly downside surprise.