September 29, 2008

VIA EDGAR AND OVERNIGHT MAIL

Mr. Jim Rosenberg
Senior Assistant Chief Accountant
Division of Corporation Finance
U.S. Securities & Exchange Commission
100 F Street, NW
Washington, DC 20001-2016

Re:		BioCryst Pharmaceuticals, Inc. Form 10-K for the Fiscal Year Ended December 31, 2007 File No. 0-23186; Form 10-Q for the Quarter Ended March 31, 2008; Form 10-Q for the Quarter Ended June 30, 2008

Dear Mr. Rosenberg:

This letter responds to your letter dated August 29, 2008 in connection with the above referenced file. To facilitate your review, we have reproduced your comments in bold below and have provided our response immediately following your comment.

1.		To the extent not already disclosed, please include the following information in the discussion of each of your corporate alliances, academic alliances and government contracts:

•		each party’s rights and obligations under the agreement
•		the percentage range of royalties;
•		the aggregate potential milestone payments; and
•		the expiration and termination provisions.

RESPONSE:

We believe the Company has disclosed the principal aspects of its material alliances. In certain cases, some of the details of the agreements have been afforded confidential treatment by the Staff under Rule 24b-2. Nevertheless, in response to your comment, we have reviewed the disclosure contained in our recent 10-K and have determined to make the disclosure more robust in the future by including information which had been disclosed in previous SEC filings. Exhibit A is a sample of such disclosure, which has been redlined for convenience.

2.		Please tell us why it was appropriate under GAAP to defer $2.3 million in pre-contract costs incurred in 2006 and expense these costs in 2007.

RESPONSE:

The Company’s contract with the U.S. Department of Health and Human Services (“HHS”), which was awarded on January 3, 2007, is a cost-plus-fixed-fee (“CPFF”) contract. That is, the Company is entitled to receive reimbursement for all costs incurred related to the development of peramivir plus a fixed fee, or profit. The Company incurred $2.3 million of costs in 2006, which were directly associated with the contract and were incurred in anticipation of a contract award from HHS. These costs were required to meet the delivery schedule of the proposed contract, and based on discussions with the Contracting Officer and in accordance with the provisions of Federal Acquisition Regulation 31.205-32, the costs were eligible for reimbursement.

Chapter 3.10 of the American Institute of Certified Public Accountants (“AICPA”) Audit and Accounting Guide for Government Contractors, states that pre-contract costs should be accounted for in conformity with paragraph 75a of AICPA Statement of Position No. 81-1, Accounting for Performance of Construction-Type and Certain Production-Type Contracts. This guidance states that costs incurred for a specific anticipated contract may be deferred if the costs are directly associated with that contract and recoverability from the contract is probable. Therefore, the Company deferred the $2.3 million of costs incurred during the fourth quarter of 2006 and prior to the contract award date of January 3, 2007. The $2.3 million in costs were expensed in January 2007 and revenue in an equal amount plus the applicable fixed fee was recognized concurrently.

3.		Please explain in expanded disclosure why you had such a significant receivable ($36.5 million) from HHS at December 31, 2007. Explain why revenue recognition in 2007 was appropriate. Page 41 indicates that you bill HHS monthly.

RESPONSE:

The Company invoices HHS for expenses incurred relative to work done within each calendar month. The internal and external process of generating these invoices is time consuming and results in the Company billing on average of 60 days after the period ends. The process of HHS reviewing these invoices involves multiple layers of review and approval which results in payment on average of in excess of 60 days beyond the date of invoice submission. As disclosed in the Company’s 10-K for the year ended December 31, 2007, the Company had approximately $36.5 million due from HHS, of which $23.1 million was related to billed receivables and $13.4 million was related to unbilled receivables. The billed receivables represent the costs incurred and applicable fee for the months of July, August, September and October. The unbilled receivables represent the costs incurred and applicable fee for the months of November and December. All of these factors contributed to a build-up of receivables at December 31, 2007. As of the date of this letter, all but $351,000 has been paid or is expected to be paid by HHS.

In accordance with Staff Accounting Bulletin No. 104, Revenue Recognition (“SAB 104”), and Accounting Research Bulletin No. 43, Chapter 11, Section A, Government Contracts, Cost-Plus-Fixed-Fee Contracts, the Company recognizes revenue as reimbursable costs are incurred under the contract with HHS. Based on this guidance, the Company recognized revenue equal to the amount of reimbursable costs (both internal and external) incurred through December 31, 2007, plus the applicable fixed fee.

4.		Please clarify for us in your disclosure the accounting for sublicense payments and maintenance payments and your basis of accounting for these payments. Provide the nature of costs deferred and why you believe deferral is appropriate.

RESPONSE:

The Company expenses sublicense payments as incurred unless they are related to revenues that have been deferred, in which case the expenses are deferred and recognized over the related revenue recognition period. The Company expenses maintenance payments as incurred.

The Company’s accounting for deferred sublicense payments related to revenues that have been deferred is based on the guidance in SAB 104. SAB 104 states that the incremental direct costs incurred related to the acquisition or origination of a contract in a transaction that results in the deferral of revenue may either be expensed as incurred or accounted for in accordance with paragraph 4 of Financial Accounting Standards Board (“FASB”) Technical Bulletin 90-1, Accounting for Separately Priced Extended Warranty and Product Maintenance Costs (“FTB 90-1”). At December 31, 2007, the Company had deferred collaboration expenses of approximately $12.3 million. These deferred expenses were sub-license payments, paid to our academic partners upon our receipt of consideration from various commercial partners. These deferred expenses would not have been incurred without receipt of such payments from our commercial partners and are being expensed in proportion to the related revenue being recognized. We believe that this accounting treatment appropriately matches expenses with the associated revenue.

5.		Provide the disclosures specified in paragraph 14b of FAS 68 or tell us why they are not required.

RESPONSE:

Of the relationships outlined in Note 10 to the financial statements included in the Company’s 2007 Form 10-K, the Company believes that only the contracts with HHS and Mundipharma contain obligations for the Company to perform research and development. The other relationships are license agreements under which the Company has no obligation to perform contractual research and development for others.

FASB Statement No. 68, Research and Development Arrangements (“FAS 68”), specifically exempts government contracts from its scope. Accordingly, we do not believe that the disclosure requirements of FAS 68 apply to the HHS contract.

However, the Company recognizes that certain aspects of FAS 68 appear to apply to the relationship between Mundipharma and the Company. In previous filings the Company has included much of the required disclosure in paragraph 14 of FAS 68. The terms of significant agreements under the research and development arrangement with Mundipharma are disclosed in Notes 1 and 10. Furthermore, the amount of revenue recognized related to our contract with Mundipharma also has been disclosed in Note 1. In order to fully satisfy the disclosure requirement, in future filings we also will separately disclose the costs incurred by the Company related to the contract with Mundipharma, which are currently reported in research and development expenses in the statement of operations.

6.		It appears that you have not filed as an exhibit to your filing a copy of your agreement with Green Cross Corporation. Please file this agreement as an exhibit to your filing or, alternatively, please provide us with a supplemental analysis supporting your determination that you are not substantially dependent on this agreement.

RESPONSE:

The Company has not filed a copy of the agreement with Green Cross as an exhibit as we do not believe this is a material agreement, nor is the Company substantially dependent on this collaboration. Therefore, we are not required to file a copy of the agreement under Item 601(b)(10) of Regulation S-K. Under the terms of the agreement, which had an effective date of June 12, 2006, Green Cross paid BioCryst a one time license fee of $250,000. Total future milestone payments by Green Cross would be equally modest. Finally, while it is possible that at some point in the future we may receive royalties, we do not believe that those payments will be significant. Therefore, we do not believe that this contract will be of material significance to the Company in the foreseeable future.

7.		Please tell us what the impact, if any, of adopting FAS 159 had on your financial statements. Explain why the disclosure of adopting the standard was not warranted.

RESPONSE:

At January 1, 2008, the Company adopted FASB Statement No. 159, The Fair Value Option for Financial Assets and Liabilities (“FAS 159”) but did not elect to change the accounting for its financial instruments. Therefore no disclosure regarding FAS 159, was made in the 1Q 2008 and 2Q 2008 Form 10-Qs. In future filings we will disclose that the Company did adopt FAS 159, but did not elect to apply fair value accounting to any financial instruments that were not already accounted for at fair value under existing guidance.

8.		You reversed $4.9 million of revenues related to your contract with HHS in the quarter ended June 30, 2008. Please explain why you believed it was appropriate under GAAP to recognize these revenues in an earlier period, that is, why you believed these Phase III costs were reimbursable under the contract. We note in January 2008 you announced that development costs would exceed the amount of the contract and HHS indicated they would fund certain elements of the revised program.

RESPONSE:

The contract we have with HHS requires them to reimburse all costs associated with the development of peramivir, including wind down costs for our Phase III program. As such, all costs have been recorded properly as reimbursable. In January BioCryst announced that the total costs of the peramivir program would exceed the original contract amount of 102.6 million. We have not exceeded the total contract amount.

Also in January, we announced our development plan for peramivir had changed and that HHS would fund certain elements of the revised program. We further announced that HHS would play a more active role in the program and in reviewing related spending under this contract. The Company further disclosed that upon consideration of various factors and several discussions with HHS, the Company would not continue the phase III program. During the last quarter of 2007 and the first quarter of 2008, the Company recorded revenues related to the execution of the phase III program in accordance with the contract with HHS. During the first quarter of 2008, the Company also recorded revenue related to the wind-down costs associated with terminating the phase III program. Under the terms of the HHS contract, the Company believed and continues to believe that these costs are reimbursable by HHS.

At the end of the first quarter, we determined that it was probable that HHS would reimburse us for the costs incurred under the phase III program including reasonable wind down costs and that no reserve against revenue was necessary, as we believed these costs were reimbursable under the contract . However, the Company recognized that some of the costs incurred could be subject to different interpretation by HHS and that it was possible that some portion of the costs would not be reimbursed. Accordingly, the Company disclosed the risk associated with revenue recorded in our Form 10-Q for the quarter ended March 31, 2008.

For the first time, in July 2008, HHS verbally indicated that it did not intend to reimburse the Company for all of the costs incurred related to the terminated Phase III program. Therefore, under FAS 5, the Company determined that it was probable that a loss would occur and the loss could be reasonably estimated. Therefore, during the second quarter of 2008, the Company recorded a reserve against revenue for amounts the Company previously expected to receive from HHS related to the peramivir phase III program. As previously mentioned, the contract with HHS is as a CPFF contract and revenue is recorded as described in Item 3 of this letter.

*           *           *

The Company acknowledges that it is responsible for the adequacy and accuracy of the disclosure in the filing; staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and the Company may not assert staff comments as a defense in any proceeding

initiated by the Commission or any person under the federal securities laws of the United States.

If you have any questions, please contact our outside corporate counsel, Brian Lane of Gibson, Dunn & Crutcher LLP at (202) 887-3646.

Sincerely,

/s/ Stuart Grant

Stuart Grant
Senior Vice President & Chief Financial Officer

Cc:		Jon Stonehouse Mike Darwin Alane Barnes Brian Lane Mike Mills