Vaccine maker Bavarian Nordic (BVNR.Y 0.51%) and antiviral producer Siga Technologies (SIGA 1.34%) appear to be the early leaders in monkeypox prevention and treatment. Quest Diagnostics (DGX 2.01%) has the capacity to run 30,000 tests per week, and is expected to be able to scale upward from there.
Will any of these companies experience a tailwind like the one COVID-19 provided for Moderna, Novavax, and Pfizer? Let's take a closer look at each one.
Bavarian Nordic
Bavarian Nordic knows a thing or two about vaccines -- it already has shots for rabies, tick-borne encephalitis, smallpox, and Ebola approved in either the EU or U.S., or both. And now, its Jynneos vaccine is the only vaccine approved by the European Medicines Agency (EMA) and U.S. Food and Drug Administration (FDA) for monkeypox.
Headquartered in Denmark, this healthcare company generated sales of 1.9 billion Danish kroner in fiscal 2021, or about $260 million. With the monkeypox global emergency, it has increased guidance multiple times and is now targeting roughly $370 million to $400 million for 2022. But there still may be room to increase those lofty goals, as Bavarian Nordic has not yet turned down any government requests.
Admittedly, this Danish vaccine company trades at a somewhat steep forward price-to-sales ratio of 8.7, more than double that of Sanofi or Moderna. But Bavarian Nordic has serious potential to grow further. If we start to talk about offering the vaccine en masse with any regularity, those increased revenue numbers might actually be sustainable for years to come.
The stock becomes much more enticing with each day that we don't get a lid on top of this global health crisis.
Siga Technologies
As maker of the antiviral medication Tpoxx, Siga Technologies already has a leg up on its COVID-fighting peers. Unlike Gilead Sciences' remdesivir or Pfizer's Paxlovid, Tpoxx is a known entity, having already been approved by the FDA in 2018 for smallpox. Dosing is convenient, with approvals for adults and pediatric patients in both intravenous and pill formats.
While only available through expanded access programs -- better known as compassionate use -- Tpoxx remains the only therapeutic discussed on the websites of the Centers for Disease Control and Prevention (CDC) and the Infectious Diseases Society of America. Essentially, Siga has a huge head start on any potential competition.
While the company has primarily focused on maintaining strategic stockpiles of antiviral therapies for various governments, it now has to quickly ratchet up production. It experienced an influx of new contracts in Q2, to the tune of $48.5 million thus far. Not bad, considering it has averaged around $130 million in revenue in each of the last two years. With the price tag at about $1,000 for a one-week course of treatment, Siga could see revenue grow quickly if case numbers ramp up.
Another big potential indication could be post-exposure prophylaxis (PEP) -- that is, taking Tpoxx after being exposed to monkeypox in order to reduce the risk of contracting the illness. This would likely be a win-win scenario for Siga. If public health officials are able to contain the virus, governments would likely stockpile PEP doses -- and PEP is a four-week course of treatment. If the virus can't be contained, Siga might be looking at years of revenue from both PEP and treatment courses.
Quest Diagnostics
Right now, access to monkeypox testing is limited to lengthy PCR tests. This means the kind of rapid, over-the-counter antigen tests that patients may have become accustomed to for COVID-19 testing isn't quite here yet. That's good news for the medical lab company Quest Diagnostics.
Quest claimed it would be able to perform approximately 30,000 tests a week for monkeypox by the end of July. That would give it three times the testing ability of competitor Laboratory Corporation of America Holdings (LH 1.02%). And given that the CDC's Laboratory Response Network -- including five nationwide laboratories the CDC selected to expand test capacity -- has the capacity for up to 70,000 tests weekly, almost half of the testing would run through Quest.
While an at-home test has been developed by privately held Flow Health, it is still a PCR-based test that has to be sent off and run in a lab. Quest has the scale and experience to run these tests faster and more efficiently.
The company actually raised guidance for the full year during its Q2 earnings call. Admittedly, it was a relatively small raise, from a range of $9.2 billion to $9.5 billion up to a range of $9.5 billion to $9.7 billion. This was primarily due to COVID-related revenue decelerating less than anticipated.
And Quest is continuing to increase its retail relationships, with approximately half of its COVID-19 volume now coming from retail channels. In addition to CVS Health and Walmart locations, Quest is now collecting specimens at Rite Aid drugstores too.
With a price-to-sales ratio of just 1.6 and a current dividend yield of 2%, Quest Diagnostics may warrant a second look from income investors.
