Monkeypox outbreak could send shares of these companies higher – BNN Bloomberg

(Bloomberg) — As health officials around the world look for ways to halt the monkeypox outbreak, investors are buying up shares in companies that could benefit from the race to contain the disease.

Stocks of vaccine makers, antiviral drug makers and protective gear makers are in high demand as investors resort to a strategy that has reaped gains during the coronavirus pandemic. Biotechnology company Bavarian Nordic A/S and pharmaceutical company Siga Technologies Inc. are among the stocks in focus, as is medical instrument maker Precision System Science Co.

The spread of monkeypox infections to more than 70 countries in just a few months, while nowhere as serious as the Covid-19 outbreak, has prompted the World Health Organization to declare it a global emergency. This announcement could add some tailwind to trading.

“Right now the world is relying on one manufacturer for monkeypox vaccine, Bavarian Nordic,” said Manish Bhargava, fund manager at Straits Investment Holdings Pte in Singapore. “To keep up with demand, we can expect other biotech companies to expand research and production. This is beginning to be reflected in the sector’s strong share price performance.”

Here are some sectors and companies that have been active:

vaccines and antivirals

Shares of Bavarian Nordic have more than tripled from a May low after governments began ordering the Danish company’s monkeypox vaccine — the only one approved specifically to ward off the infection. The company has raised its sales forecast several times this year.

Analysts note that Citigroup Inc. raises its price target on the company’s stock by 20%, indicating that there could be further upside as more orders come in.

Shares of other companies that make monkeypox vaccines or antivirals have also caught the eye of US retailers. Siga Technologies, which makes a drug called Tpoxx, has doubled its stock this year. The therapy is approved for the treatment of smallpox in the US and monkeypox and other viruses in the European Union and the United Kingdom.

Chimerix Inc.’s Tembexa is a countermeasure used to treat smallpox, and the company said in May it would sell the drug to Emergent BioSolutions Inc. On the vaccine side, Emergent’s ACAM2000 is a smallpox vaccine that can be used against monkeypox in some cases.

According to Cowen Inc. analyst Boris Peaker, Siga, Chimerix and Emergent are the “key beneficiaries” of the WHO’s declaration that the monkeypox outbreak is a global emergency.

“With increased resources for contact tracing and testing in the EU and US, we expect case numbers to increase significantly over the next few months, potentially leading to more procurement of countermeasures,” Peaker wrote in a note.

Japan has also started investigating smallpox vaccines to prevent the outbreak from spreading, and this could attract interest in Meiji Holdings Co. as its unit KM Biologics makes a smallpox vaccine. Meiji Holdings is up 12% from the June low.

The Asian nation has a stockpile of smallpox vaccines, but the amount has not been disclosed as preparations for Tpoxx administration progress, Citigroup analyst Hidemaru Yamaguchi wrote in a note.

virus detection

Companies that offer virus testing kits and tools are also in focus.

In Japan, shares of Precision System, a maker of medical testing equipment, have nearly doubled since late June. Swiss company Roche announced in May that it had developed three test kits to help scientists detect monkeypox.

More than 30 companies in China have received EU certification for their monkeypox virus detection products, analysts at Jefferies Financial Group Inc., including Christopher Lui, wrote in a July 25 statement. These include early risers like Autobio Diagnostics Co., Shanghai ZJ Bio-Tech Co. and Daan Gene Co. Shanghai ZJ is up almost 40% in July.

Manufacturers of antigen and antibody test kits such as Zhejiang Orient Gene Biotech Co. and Assure Tech (Hangzhou) Co. are the other potential beneficiaries.

©2022 Bloomberg LP