NEW YORK (CNNMoney.com) - The race to become the leading bird flu battler is getting tighter, with a little Alabama biotech gaining on the front runner.

The Food and Drug Administration Thursday gave verbal approval to start human testing of a new drug called peramivir. Should the tests prove successful the drug could become an alternative to Tamiflu, the medicine currently considered the leading treatment for bird flu. And the effectiveness of that treatment has been called into question this week, with a report in the New England Journal of Medicine that bird flu patients died despite taking Tamiflu.

The stakes, both human and economic, are high.

Bird flu is a virus that originated in Asia among birds and has spread to Europe and other parts of the world, infecting about 139 people so far. The virus has a mortality rate of about 50 percent and is transmitted from birds to people. Bird flu is not transmitted from person to person, but many scientists believe that it could mutate into a strain that is transmitted among humans, like the influenza pandemic of 1918 that killed tens of millions of people.

On Monday the U.S. House of Representatives earmarked $3.78 billion to begin preparing for a possible bird flu pandemic. The money would be used to stockpile vaccines, which are still in the experimental stages, and anti-virals. Also, the bill would shield drug manufacturers from potential lawsuits. The Senate has not yet voted on the bill.

The economic consequences of being the leading supplier of drugs to fight the potential epidemic has not been lost on Wall Street.

Shares for BioCryst Pharmaceuticals, the Birmingham, Ala.-based biotech that develops the anti-viral peramivir, jumped 17 percent Thursday morning, after the FDA gave its approval for human testing.

"BioCryst will see long-term benefit from uncertainty over Tamiflu," said Vinny Jindal, analyst for Webbush Morgan Securities, who increased his 12-month BioCryst (Research) price target to $24 a share from $17. Jindal projection also reflected the 2.2 million share investment from venture capital group Kleiner, Perkins, Caufield and Byers.

Meanwhile, Roche, a Swiss drug giant, saw its shares trade mildly down in Europe. It has been marketing Tamiflu in the U.S. since its FDA approval in 1999. Tamiflu, also known as oseltamivir, was developed by Gilead Sciences (up $0.80 to $54.87, Research), a biotech based in Foster City, Calif.

The New England Journal of Medicine reported that the recent deaths of two Tamiflu-treated patients demonstrate "that resistance can emerge during the currently recommended regimen of oseltamivir therapy" and that "virus infection should include additional antiviral agents."

Roche acknowledged, in a Thursday press release, that "further evaluation [is] needed on higher dosage, longer treatment and combination therapies."

But Roche is not really threatened by the news regarding Tamiflu, says Jindal, the Webbush Morgan analyst.

"The global demand for Tamiflu is far outpacing supply, so the emergence of Tamiflu resistance doesn't mean that Tamiflu will be used any less or that Roche won't be able to sell all they can make," said Jindal.

Jindal said that investors who dumped Roche stock on Tamiflu-related headlines were "trading erratically."

Roche has taken orders for Tamiflu stockpiles from scores of national leaders. But the manufacturing process for Tamiflu is time-consuming and, bending to public pressure, Roche said it would outsource production to other drug makers.

GlaxoSmithKline (down $0.10 to $51.09, Research), the British drug giant, also produces an anti-viral for H5N1, an inhalable pharmaceutical known as Relenza, or zanamivir. The company's stock price declined slightly on Thursday.

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To read more about Defense Secretary Donald Rumsfeld's stake in Tamiflu, click here.