BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX) has caught our attention in the biotech space as being a company that has had a bit of a strange start to the week. The company just announced financials results for the fourth quarter of 2016 and full year 2016, and shortly before the results hit press, also submitted interim data from a phase II study in a condition called hereditary angioedema (HA).

The data came out as positive, but as per market interpretation (and based on reaction to said interpretation) of the numbers, not quite positive enough. At the same time, the numbers put out paint the company’s financials in something of a negative light. On the latter point, we attribute this to the trend of the mainstream financial media publishers to report top and bottom line as the headline figures, which of course, basically mean nothing to a development stage biotech company like this one. Well, topline, in a small way, but not bottom.

On the former point, we think that markets’ reaction is a little harsh, and that there’s room for a sentiment shift and (in turn) a revaluation, as things realign.

Let’s back this statement up with some analysis.

So, we’ll quickly touch on the financial numbers first, and then spend the majority of our time on the data.

The company reported final quarter 2016 revenues at $9 million, up from the $4.6 million reported for the same period a year earlier. R&D costs dipped from $19 million to a little over $12 million during the periods in question. The decrease was due primarily to lower spending on the Company’s HAE portfolio of compounds associated with the discontinuation of avoralstat development in 2016. The net loss for the fourth quarter of 2016 was $4.5 million, or $0.06 per share, compared to a net loss of $18.1 million, or $0.25 per share for the fourth quarter of 2015.

Now, the data.

As mentioned, it’s targeting HA, which is a rare condition caused by a low level or improper function of a protein called the C1 inhibitor. It affects the blood vessels, and it’s characterized by rapid onset attacks, which in turn, are characterized by rapid swelling of the hands, feet, limbs, face, intestinal tract, larynx (voicebox), or trachea (windpipe).

The drug in question is called BCX7353, and it’s an oral administration formulation pill. This is key, because the current standard of care treatments all involve injections.

As per the data, treatment with BCX7353 reduced the rate of angioedema attacks by 52% compared to a placebo. The patient count was 28. There is some suggestion that four of these didn’t have a confirmed HA diagnosis, however, and so when these are removed from the sample, the reduction rate jumps to 63%.

So what’s the concern?

Two things. First, markets were looking for a rate of around 70% reduction, based on previous studies and company communication. Second, that this just mentioned 70% is really the minimum threshold that BCX7353 would have needed to hit if it can be considered comparable to the current standards of care – some of which have reduction rates in excess of 80%.

Sure, these are concerns, but for us, they are not overly important. The bottom line here is that the drug seems to work, and work very well (a circa 60% reduction in attacks should easily be enough to be considered clinical benefit when the drug goes in front of the FDA). Additionally, and perhaps more importantly, it’s a far more attractive regimen that current SOC. Pills are widely self administrable, far cheaper, far safer and bring about far less by of unwanted side effects than injectables, and that’s just based on administration. Looking at this formulation specifically, the safety and tolerability profile are excellent, and shouldn’t really be a consideration (at least, to the negative, that is) if the drug hits NDA.

So what’s the takeaway?

Well, BioCryst currently trades for a more than 15% discount on its weekly open, and will open up this morning around 4% down on yesterday’s close based on after hours back and forth. We think there’s an opportunity to pick up a discount exposure to a realignment very near term for a few or more percentage points, and also a longer term opportunity on the advance of this phase II towards topline release.

One to watch.