The most recent analyst call by Merrill Lynch for BioCryst Pharmaceuticals Inc. (NASDAQ: BCRX) may be very misunderstood for what it is. The brokerage firm upgraded BioCryst to Neutral and raised its price objective to $12 from $8, implying an upside of 16.6% from current prices.

When you see a company jump a price target by 50%, generally you might think that this would be a good time to buy or at least necessitate a Buy rating. However, this is not the case with Merrill Lynch’s 50% hike. Looking back to the beginning of 2015, BioCryst was actually a $12 stock, but it couldn’t keep up with the health care sector and eventually fell way behind. At this point a Neutral rating seems more appropriate for the stock’s recent performance and what is expected from the report.

BioCryst believes that targeting plasma kallikrein should lower breakthrough attack risk with BCX4161 and that more hereditary angioedema patients will seek prophylactic treatment if offered better dosing regimen options to the current standard of care Cinryze.

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Dosing for BCX4161 is nine to 15 pills per day, but that is still better than Cinryze, in Merrill Lynch’s view. However, the firm believes Dyax’s once every two weeks injection will be preferred in sicker patients, if approved. Likely adopters of BCX4161 could be patients with low attack frequency.

Merrill Lynch believes that the heavy pill burden, low bioavailability and moderate efficacy — roughly 35% reduction in attacks — seen for BCX4161 limits the commercial potential of the drug. However, the firm thinks the drug could appeal to low-attack frequency patients who have less fear of breakthrough attacks.

BioCryst will soon advance a one pill-per-day candidate BCX7353 to Phase 1. Merrill Lynch models a 10% peak share and 25% likelihood of approval for BCX7353. If approved, there is expected cannibalization from BCX4161 and significantly higher peak share.

The company will present pharmacokinetic/pharmacodynamics results from its second generation product in the third quarter of 2015. Data from the OPuS-2 trial for BCX4161 are expected in the fourth quarter of 2015. If positive, the company will collect long-term safety data and conduct a second pivotal trial. Merrill Lynch expects BCX4161 to launch in the United States in 2018.

This call by Merrill Lynch removed the lowest price target for the stock, but it is still well below the consensus analyst price target of $17.70.

Shares of BioCryst were up 5.2% at $10.29 Monday afternoon, in a 52-week trading range of $7.29 to $14.62.

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