Here's Why BioCryst Pharmaceuticals Gained as Much as 15.7% Today

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What happened

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Shares of BioCryst Pharmaceuticals (NASDAQ: BCRX) rose nearly 16% today to start off 2018 on the right foot. The catalyst: Analysts at RBC Capital upgraded their opinion of the stock from market perform to outperform. That was enough to vault the company's market cap to over $500 million for the first time since last September.

The company's novel approach to fighting orphan and infectious diseases has long been intriguing to investors, although big winners have remained elusive over years of development. Today's analyst note is being seen as a vote of confidence in the drug pipeline's direction. As of 1:35 p.m. EST on Tuesday, the stock had settled to a 12% gain.

So what

BioCryst Pharmaceuticals is developing two named drug candidates, BCX7353 and BCX4430. The former is headed into phase 3 trials as a potential treatment for hereditary angioedema, a rare genetic disease that causes swelling of various body parts. It recently received Orphan Drug designation from the U.S. Food and Drug Administration, while the company also announced that it had agreed to terms outlining the way forward for a pivotal phase 3 trial with regulatory agencies in both the United States and Europe. The single required study will be initiated in the first quarter of 2018, and a New Drug Application could be filed as early as 2019.

That promises to be a major binary event for shareholders, no matter how it turns out. The good news is that BioCryst Pharmaceuticals has a decent cash position of $161 million as of the end of September after a major capital raise.

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Now what

That said, an analyst upgrade means relatively little for long-term shareholders. This stock's fate will be determined by success or failure in the clinic. Even then, bringing a new drug to market can be a difficult and expensive endeavor, which means even a potentially successful phase 3 trial won't mean investors are out of the woods yet.

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Maxx Chatsko has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.