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BioCryst Tripped Up by Downgrade

Stocks in this article: BCRX RDEA SVNT

NEW YORK ( TheStreet) -- Shares of BioCryst Pharmaceuticals (BCRX) fell Thursday on more than twice their usual volume after the Birmingham, Ala.-based drug developer was hit with a downgrade by Bank of America-Merrill Lynch.

The firm mainly cited a weakening outlook for Peramivir, the company's proposed flu treatment, for the lowering of its rating on the shares to underperform from neutral. It also cut its 12-month price target on the stock by 37.5% to $5 from $8.

"Given weak worldwide flu trends and FDA's rejection of BioCryst's peramivir trial approach, we now expect a 1-year launch delay to 2013 and more modest flu incidence expectations," Bank of America-Merrill Lynch said in a note to clients. "The key phase 3 study (301) has been slow to enroll patients in the southern hemisphere and will likely require next year's flu season to satisfy enrollment requirements."

The stock was down 6.4% to $4.81 shortly after the closing bell. Volume of around 977,000 compared to the issue's trailing three-month daily average of roughly 377,000. Year-to-date, the shares have fallen around 20%, but they had rallied some since plumbing a 52-week low of $4.43 on August 25, hitting an intraday high of $5.69 on Sept. 14.

Bank of America-Merrill Lynch also expressed restrained optimism about the clinical progress that BioCryst recently reported on a potential treatment for gout, where its BCX4208 drug showed promise in combination with allopurinol.

"We have modest expectations for this drug without visibility regarding the risk of lymphocyte impact to patients," the firm said, adding that it will be looking to see the results of the monotherapy trial of BCX4208 at the American College of Rheumatology meeting in November.

The firm added that a gout drug being developed by Ardea Biosciences (RDEA) actually posted stronger results in combination with allopurinol, making it "a more compelling therapeutic approach."

Another drug company recently made headlines by getting approval for a gout drug, Savient Pharmaceuticals (SVNT), whose stock is up more than 60% year-to-date.

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