BioCryst Shares Slide As Reddit-Induced Rally Peters Out

BioCryst Pharmaceuticals, Inc. BCRX shares, which had been locked in a trading range since the start of January, broke out of the range Monday and rallied strongly, only to pull back in the next session.

Monday's 39% Rally: BioCryst shares gap opened Monday's session about 26% higher and peaked at $12.04 in afternoon trading, representing a gain of 41.3%.

After giving back some gains, the stock ended at $11.85, a 39% advance for the session.

BioCryst is a small-cap biopharma that focuses on the development of oral, small-molecule medicines that treat rare diseases in which significant unmet medical needs exist and an enzyme plays a key role in the biological pathway of the disease.

The company has two approved products in the form of Orladeyo, a prophylactic treatment for hereditary angioedema, and Rapivab, an influenza treatment.

BioCryst is also evaluating in the clinics an oral liquid formulation of Orladeyo for acute HAE, BCX9930 for complement-mediated diseases and BCX9250 in fibrodysplasia ossificans progressive. It is also studying galidesivir, a broadspectrum antiviral.

Related Link: Attention Biotech Investors: Mark Your Calendar For February PDUFA Dates

Monday's rally had nothing to do with company-specific catalysts.

On the Reddit investing forum r/WallStreetBets, a post raised questions regarding the valuation of the stock.

"So why is this company, with zero risk of dilution due to an amazing royalty deal it signed in December and three super-drugs each worth tens of billions of dollars, and a host of other exciting developments to look forward to, worth only $1.5 billion right now?" the post said. 

The Reddit poster reasoned that BioCryst shares were "relentlessly shorted" in 2020 and in 2021 to help institutions acquire the stock at an attractive price. 

Subsequently, Reddit users declared a "BioWar" against these short sellers.

BioCryst Pulls Back: The stock couldn't find support at the level to which it was propelled on the back of the Reddit rally. 

BioCryst shares opened Tuesday's session lower at $10.75 and dipped as low as $9.44, a decline of about 20%. The stock has cut some of the losses since then.

In the months to come, the stock is at the mercy of a few regulatory and clinical catalysts.

The European Union will rule on BioCryst's Orladeyo in HAE, and the company is due to release data from treatment-naïve and inadequate C5 responders dosed with up to 500 mg of BCX9930 in paroxysmal nocturnal hemoglobinuria in the first quarter of 2021.

BCRX Price Action: At last check, BioCryst shares were plunging 10.31% to $10.64.

Related Link: The Week Ahead In Biotech: Merck, Pfizer In Earnings Mix, Plus Adamas, Mallinckrodt FDA Decisions, IPOs And More

Posted In: RedditBiotechSmall CapMoversTrading Ideas

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