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BioCryst (and Its Needles) Comes Up Short

Investors and analysts balk at the biotech's 'short-needle' defense of flu treatment peramivir.

BioCryst Pharmaceutical's

(BCRX) - Get Report

plea that a phase II flu treatment trial suffered only from a severe case of short needles did little to reassure investors Thursday. Shares fell more than 30%. And a potentially promising ad-hoc analysis of 101 patients based on the enzyme creatine kinase has analysts debating whether CK is OK.

BioCryst said after the market close Wednesday that peramivir for seasonal flu

failed to meet the primary endpoint in the midstage trial because too-short needles failed to deliver the drug to the muscle in all of the patients. But the company identified a group of patients in which the injection reached the muscle -- by a measure of creatine kinase, or CK, which is elevated when muscles are injured or damaged -- and said in this group peramivir performed quite nicely.

Not everyone was convinced, "...we remain perplexed as to how the 101 better-responding patients were selected since both obese and normal patients were shown to have elevated CK levels," noted a Rodman & Renshaw report. Others were unsure of the accuracy of CK as a marker because although it shows muscle injury, it can be affected by a variety of things.

A 40-patient pharmacokinetic study available by year-end could cast more light on the thesis surrounding the CK-peramavir concept. But until that happens, analysts have noted the increased risk in the company, which at this point has two compounds in clinical trials and no marketed drugs.

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ThinkEquity downgraded the stock Thursday to accumulate with a $10 price target, saying, "Until we feel more comfortable about the capability of intramuscular delivery of Peramivir, we believe there exists a new and significant commercialization risk."

Regardless, BioCryst's attitude at this point is that the show must go on. On a conference call Wednesday night, CEO Jon Stonehouse maintained confidence in the company's assessment of the CK measurements and peramivir's performance. He relayed plans for a phase III trial, which will take into account patient size in relation to needle size.

"While management is committed to initiating phase III trials evaluating peramivir by year-end, we believe the company would benefit in the long run from another phase II trial to fine tune the injection regimen and to gain more confidence in the efficacy of peramivir," remarked Reni Benjamin, senior biotechnology analyst at Rodman & Renshaw in a report Thursday.

Beyond the CK debate, others question the company's ability to establish a successful needle-length protocol for a phase III study.

"Our concern is that lack of standardization may result in variation of needle size employed across centers and it may be advantageous to have predetermined standard needle length as part of the trial protocol, given that needle length impacts the delivery of the drug," said a Leerink Swann report on Thursday.

The company said it will meet with the Food and Drug Administration to discuss the phase II study and phase III plans in addition to the 40-patient pharmacokinetic study.

Shares fell $4.06, or 34.5%, to $7.72 in recent trading Thursday.