As the COVID-19 pandemic eases its way toward endemic levels -- meaning the illness would still exist but not disrupt daily life on a mass scale -- another pandemic may be slowly growing. Monkeypox is a rare disease that has seen an increase in cases globally -- nearly doubling between July 6 to July 15 -- and though it can be fatal, it hasn't reached the height of fatality as COVID. The fatality rate for monkeypox is 3% to 6%, compared to 1.1% for COVID-19, but the number of monkeypox cases is far less at 12,000 compared to the 562 million we've seen for COVID.
Nonetheless, after seeing COVID's effects on people and businesses, and its impact on healthcare, it's not unreasonable to think that aggressive action may be taken to combat the disease before it spreads widely through the population. Unlike COVID when it emerged in 2019, monkeypox is a familiar disease to the World Health Organization (WHO). It's related to smallpox, which was eradicated in 1980; this gives the world -- and companies focusing on a vaccine for the disease -- a leg up in the fight to combat a spread.
Investors in top pharmaceutical companies like Moderna, Pfizer, and Johnson & Johnson benefited from stock spikes from early 2020 through late 2021. Today there are two companies in the fight against monkeypox that could see similar boosts.
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The only U.S. authorized monkeypox vaccine
Bavarian Nordic (BVNR.Y 1.82%) manufactures the only authorized vaccine against monkeypox, known as Jynneos in the U.S. The vaccine has received approval in Europe, the U.S., and Canada, thanks in part to its early indication for smallpox which requires similar treatment. The company claims it can produce 30 million doses per year, which may be needed: Both countries with and without reported cases of monkeypox are inquiring about obtaining the vaccine. So far, Bavarian Nordic has plans to provide 110,000 doses to the European Health Emergency Preparedness and Response Authority (HERA). In addition, the company announced a five-year contract with Canada's Public Health Agency that will bring in $56 million in revenue as that country stockpiles doses.
WHO says there are 6,000 cases of monkeypox worldwide, with roughly 1,000 in the U.S. at this time, though those numbers are growing. The current number of cases is far within the ability of Bavarian Nordic to handle based on its production capacity.
In June, New York City -- the No. 2 state by case count -- opened a clinic to vaccinate people who may have been exposed to monkeypox, in an effort to stave off the spread of what's currently 20% of the nation's total cases. The clinic is giving Bavarian Nordic's vaccine, joining both the European and Canadian agencies in willingness to use it to prevent the disease.
Bavarian Nordic's stock price has seen spikes and drops over the years. News of monkeypox case growth came after the company's stock hit a one-year low of $5.85 in early May, amid a broader market decline that started back in September when shares were at $19. Since May the stock has seen strong growth, nearly doubling that low. And it could continue to move upward as it progresses through clinical phases with a COVID-19 booster vaccine as well as further development of its -- recently approved for FDA breakthrough designation review -- RSV (a respiratory virus) prevention treatment. The company has a licensing agreement in place with Nuance Pharma in which Bavarian could receive up to $225 million by hitting milestones, in addition to tiered double-digit royalties. This could lead to big long-term gains for investors.
European authorization gives Siga Technologies a boost
Siga Technologies (SIGA 1.74%) is another company that may see a spike in its stock price as a result of a monkeypox outbreak. Siga's smallpox drug, tecovirimat (known in the U.S. as Tpoxx), has been approved for oral use against monkeypox in Europe. In the U.S., Tpoxx remains only approved for smallpox with the potential for monkeypox approval. According to Forbes, Siga's chief scientific officer said there are 1.7 million doses of Tpoxx in the U.S. government's current stockpile. But requests for the drug have been growing from countries outside the U.S., making Siga a prominent player in the monkeypox treatment market, and the company is prepared to raise production numbers as needed.
In June, Siga announced new orders in the amount of $13 million for doses of the drug to be delivered during the remainder of 2022 and part of 2023. On top of that, the company announced last week that it has received new contracts worth $28 million, driving its stock price upward by 15% on July 13. In total, the company has received $56 million in orders from six countries, of which five are new customers.
Before investing in Siga, be aware that the stock price is at an all-time high, driven by what could be. Although orders are already there, if the outbreak subsides quickly, there's a good chance that new orders will be limited. On the other hand, for those willing to take more risk, the momentum in the stock price -- combined with evidence of growing orders, and the fear of what happened during the COVID pandemic spikes -- could make this one of the smartest stock buys for a monkeypox outbreak.
The long-term success for Siga investors likely hinges on the growth rate of monkeypox. Beyond that, Siga is in the investigational phase of using Tpoxx in collaboration with cancer treatment candidates in clinical development. It could be years before anything comes of that program.
Although Tpoxx has not yet received U.S. approval for monkeypox, the Centers for Disease Control and Prevention (CDC) has used it to treat a single monkeypox case. If the drug is given an emergency approval, that could send the stock into orbit. But if monkeypox is contained to where levels are not growing any investment gains could be short-lived, making Siga a risky pick until it can prove itself.
