Should You Invest in BCX4430, the Miracle Ebola Drug?

I recently told you about a company that is working on a miracle Ebola drug, one that could help prevent future outbreaks of the deadly virus sweeping West Africa.
Indeed, experimental drug BCX4430 – developed jointly by the U.S. Government and BioCryst (Nasdaq: BCRX) – has shown incredible promise with its effectiveness.
As I wrote yesterday, the drug has been effective at preventing illness in mice, guinea pigs and monkeys infected with various viruses that are deadly to humans.
While the company hasn’t yet been able to test the drug in humans, the promising results with our close relatives in the monkey world suggest that this could be the miracle Ebola drug needed to stop the regular outbreaks of the virus in Africa.
And BCX4430 isn’t just for Ebola.
BCX4430 is being developed to fight a whole host of viruses across nine different virus families, more than 20 viruses in total. The effort is being funded in part by the U.S. government, which would likely buy huge quantities of BCX4430 if the “one-drug, multi-bug” treatment is proven effective in humans.
So is now the time to be buying shares of this little-known company?
Investors who missed out on Gilead’s (Nasdaq: GILD) Hepatitis C drug Sovaldi might be looking for the next drug to make a major impact.
But Ebola is very different than Hepatitis C.
According to the World Health Organization, 350,000 to 500,000 people die each year from Hepatitis C-related liver diseases. While this recent Ebola outbreak has been the most significant in history, it has killed just over 730 people as of last week.
Thus, the addressable market for a Hepatitis C drug is much larger than with an Ebola drug. Perhaps this explains why developing it hasn’t been a priority for major drug companies.

“It just wouldn’t make the cut at a major company,” BioCryst’s Chief Medical Officer Dr. William Sheridan told NPR.

But Dr. Sheridan, who came to BioCryst after a 15-year career at Amgen (Nasdaq: AMGN), knows that there is a market for BCX4430. “The market is the U.S. government.”
If BCX4430 is proven effective in humans then it will be an important tool for the U.S. government to fight bioterrorism and natural outbreaks that could infect millions of Americans. The investment thesis here is that if the drug gains FDA approval it will be stockpiled by the U.S. government in case of a major outbreak.
Dr. Sheridan expects phase one human testing to be complete sometime next year.
An article detailing the successful animal trials of BCX4430 was submitted to a medical journal in December 2012. Since then, the stock is up around 630%.
The article was finally accepted in January of this year. Even in the seven months since then the stock is up 24%, but it’s been a roller coaster. The stock’s 52-week high is $13.33 while its 52-week low is $4.55.
BioCryst stock currently sits around $12.50.
Despite some minor insider selling, it seems that all of the company’s major holders are accumulating additional shares. A good sign.
An investment in BioCryst is not a safe investment, however. It is a speculative trade. If you’re looking for predictable and reliable investments, look elsewhere.
If you’re looking for a speculative biotech stock that doesn’t make money but might be close to a miracle Ebola drug, then this could certainly be a good one to buy.
But even then, I’d wait for a pullback. The stock has clearly benefited Ebola’s presence in the news but won’t have a drug ready for this current outbreak.

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