Why Chinese Biotech Sinovac Soared

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Shares of Sinovac Biotech  (NASDAQ: SVA  ) soared as much as 50% intraday, as its hand, foot, and mouth disease (HMFD) vaccine aced a phase 3 trial. Before you get too excited over this groundbreaking vaccine's potential, watch this video, in which health-care analyst David Williamson argues why this new product may not transform Sinovac.

HMFD is a generally a mild illness with nearly all patients recovering in seven to 10 days. Even Sinovac said that over the last five years, only 500 to 900 cases have proven fatal  -- less than one tenth of one percent of all infections -- in China, a country with over 1.3 billion citizens. It may not be considered a serious enough issue to prompt widespread use of the vaccine in mainland China, where Sinovac derives virtually all of its sales.

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  • Report this Comment On March 14, 2013, at 9:30 PM, sold0008 wrote:

    Are you sure there are only 200,000 cases of HMFD per year in China? Reuters says that there are 2 million per year with the possibility of 10 million vaccines needed.

    In their last quarterly report, Sinovac said they are basically ready to produce the vaccine in that the production plant is ready to go.

    It seems like a sure thing that they will gain approval and be able to produce and sell the vaccine, so adding the sale of 10 million units to their yearly sales figure would seem to make a huge if not astronomical difference on their balance sheet.

  • Report this Comment On March 14, 2013, at 11:41 PM, JPG101 wrote:

    In a country with very few children per couple and occasional HFMD scares it would be surprising if there isn't some uptake. The quoted 0.1% mortality is variable and a big deal when it happens to a few children in your town. As irrational as it may seem to the author do not underestimate the motivation of parents to keeping their children alive...

    I must also be mentioned that there isn"t a lot of competition in this space. They will be the only provider world wide. They do have a market cap of barely 200 million. It doesn't take a lot to move the needle and they do have a growing number of products that get used by the most respectable heath agencies in China.

    I'm starting to wonder if a winning strategy wouldn't be an inverse David Williamson index...

  • Report this Comment On March 14, 2013, at 11:54 PM, surfson8 wrote:

    You are entitled to your opinion, but your advice is really not very good. HFMD is over 1M per year in China, and, unlike in the US where the CDC is correct to say that it is a mild illness, HFMD is much more severe in asia, and the death rate has been growing. As to "struggling with profitability", SVA has decided to invest in the HFMD clinical trials and a new production facility. Their vaccines have a fantastic profit margin - over 80%. I think that you have to spend a little time studying this company. I doubt you know anything about their pipeline, which is robust and growing. It appears that a stock gets a pop, and a kid then reads an article so he can advise investors.

  • Report this Comment On March 15, 2013, at 12:01 AM, executive187 wrote:

    Random youtube guy giving bad facts.

    This is a disease where a vaccine does not exist and millions of people around the world are affected. When children are dying SVA isn't going to limit sales to just China, but if they did the market there would be more than enough.


    "HFMD has taken a significant toll across South East Asia, affecting approximately two million children every year, with severely debilitating and sometimes fatal consequence. Many countries are implementing extra preventative measures in an attempt to control the outbreak. In recent weeks, the number of HFMD cases in Singapore has risen past the epidemic threshold, as defined by the Ministry of Health. In the first nine weeks of 2012, there were 5,568 cases of HFMD, compared to 1,908 during the same period last year. During the first two months of 2012, over 7,700 children in Vietnam contracted HFMD with nine deaths. In 2011, more than 110,000 Vietnamese contracted HFMD and 166 children subsequently died. Malaysia has also seen a recent surge. As of 6 March, the state of Sarawak reported a total of 2,143 cases with 35 pre-school/school and child care centers being served with closure orders in an effort to break the cycle of transmission.

    HFMD is a disease common in children throughout the world. However, the disease is endemic in the Asia Pacific where its incidence has been increasing steadily over the past two decades. Although the disease is typically of short duration, there has been an increase in severe HFMD infections with sequelae which include neurological symptoms such as meningitis, encephalitis and polio-like paralysis. In 2011 there was an increase in the number of cases of HFMD in East and South East Asia. Recent reports reveal more than two million HFMD infections in 2011. No vaccines or therapeutic modalities currently exist for HFMD. "

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