Monday, September 21, 2009

H1N1 BioCryst (BCRX) Alert: Stock May Soar or Crash, Straddles

BioCryst Pharmaceuticals today announced that it received an RFP (request for proposal) from the U.S. Department of Health & Human Services (HHS) for the supply of Peramivir for the treatment of critically ill influenza patients under Emergency Use Authorization (EUA). Perimavir is in late-stage trials and the FDA is considering a "pre-emergency use authorization review". The company is preparing a response.
The RFP indicates that the minimum and maximum order quantities to be ordered by the government are 1,000 and 40,000 courses of the treatment. The company emphasizes that the current RFP process may or may not result in a government order for peramivir and does not guarantee issuance of an EUA.
The stock has already gone up significantly this year, +606%, just like other H1N1 names:

If an order for the drug materializes, the stock may soar even more. If the order does not materialize, the stock could come crashing. A great way to play this is through our favourite straddles or strangles, where the investor may profit independently of stock movement direction.

We used our StraddlesCalc V2 tool to computer the maximum moves required for profitabilty for several months of options.

Straddles (10-10):

Strangles (7.50-12.50):

The moves required are very high, but the company has moved 600% this year.

For (free) trend technical analysis and alerts of BCRX sent to you (powered by INO), please enter the symbol BCRX (or any other you wish) at the Technical Trend Analysis Tool


"Peramivir is an anti-viral agent that was discovered by BioCryst which inhibits the interactions of influenza neuraminidase, an enzyme which is critical to the spread of influenza within a host. In laboratory tests, peramivir has shown activity against pandemic H1N1 swine flu origin viral strains. Peramivir has been studied in patients with complicated and uncomplicated influenza. BioCryst's partner, Shionogi & Co., Ltd. is currently preparing to file for regulatory approval in Japan this year."

Options are extremely dangerous. Please do your own dilligence.

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