Monday, May 4, 2009

Venture capital firm set to reap rewards on swine flu

LOS ANGELES, April 24 (Reuters) - The swine flu outbreak is likely to benefit one of the most prolific and successful venture capital firms in the United States: Kleiner Perkins Caufield & Byers, Thomson Reuters Private Equity Week reported on Friday.

Shares of the two public companies in the firm's portfolio of eight Pandemic and Bio Defense companies -- BioCryst Pharmaceuticals (BCRX.O) and Novavax (NVAX.O) -- jumped Friday on news that the swine flu killed a reported 60 people in Mexico and has infected people in the United States.

The World Health Organization said the virus appears to be susceptible to Roche's (ROG.VX) flu drug Tamiflu, also known as oseltamivir, but not to older flu drugs such as amantadine.

Shares of Swiss drugmaker Roche Holding AG closed up 3.48 percent after falling sharply earlier in the week on a cancer drug disappointment, while shares of U.S. biotechnology company Gilead Sciences Inc (GILD.O), which gets royalties from Roche on Tamiflu sales, slipped 10 cents to $45.80 on Friday.

But BioCryst, a maker of drugs that block key enzymes in viral diseases, jumped more than 26 percent on Friday to $2.21 per share. Viral vaccine maker Novavax rose more than 75 percent to $1.42 per share.

BioCryst CEO John Stonehouse said his company does not anticipate the use of its technology in treating this episode of swine flu.

"We're in clinical trials right now and not on the market," Stonehouse said.

Still, the companies will have to go even higher for Kleiner Perkins to make its investment back. Both BioCryst and Novavax experienced long drops from price peaks in 2006, when reports of avian flu dominated headlines. Continued...

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