Many investors likely hadn't heard of drugmaker Siga Technologies (SIGA) even just a month ago. However, with shares of the company soaring more than 48% in July, blasting past the S&P 500's gains of 9%, the stock is getting much more attention these days.

Siga's sudden rise in price and prominence traces directly to the World Health Organization's (WHO) recent announcement declaring monkeypox a public health emergency. Siga, which owns a monkeypox treatment in Tpoxx, is likely to experience a surge in sales.

The big question for investors: Is Siga's stock destined to go even higher or has it already peaked?

Why the stock could still soar

Monkeypox cases are increasing around the world, and the need for a treatment could be a continued catalyst behind Siga's stock. As of Aug. 1, there were 23,620 confirmed cases of monkeypox across 80 countries. And what's concerning is that 73 of those countries were places where monkeypox cases hadn't historically been reported. The disease has been common in some African countries, but today the bulk of cases are in other parts of the world.

Even if the disease doesn't spread as rapidly as COVID has, it could still be a big problem for the world. According to the WHO, the case fatality ratio (CFR) is between 3% and 6%. By comparison, COVID's CFR, according to data from John Hopkins, has been less than 3% for most countries.

Thus far, Siga has obtained approval for its antiviral drug Tpoxx to treat monkeypox in the U.K. and Europe. Although the Food and Drug Administration (FDA) has not approved it to treat monkeypox in the U.S., the Centers for Disease Control and Prevention is making it available through "compassionate use." An approval from the FDA, should it happen, would expand the potential use for Tpoxx and would likely send Siga's stock higher.

The healthcare company says it has already received $56 million in international orders for oral Tpoxx (which in the past have primarily come from the Canadian and U.S. governments), and notes that five of the six jurisdictions that have placed orders represent new customers. Last year, the company's annual revenue was just under $134 million.

Why it could be too late to buy the stock

The danger with buying shares of Siga is that you're effectively betting on the outbreak of monkeypox. That's risky because while the fatality case rate appears higher than COVID, it may not end up being that way. Plus, early indications are that monkeypox is transmitted primarily through direct contact, which would make it less likely to spread as aggressively as COVID, which is airborne.

Investors jumping on the bandwagon and hoping that Siga can be the next Moderna could be sorely disappointed. Its business just isn't robust and diverse enough for investors to have much to fall back on if rising monkeypox cases don't lead to a significant increase in demand.

Siga's business, up until now, has depended mainly on the Canadian and U.S. governments for revenue. In its annual report last year, it cautioned that "our ability to grow our business may depend in part on our ability to achieve sales of Tpoxx to customers other than the U.S. and Canadian governments."

Without monkeypox, the demand for Tpoxx isn't likely to be strong. The FDA granted approval for Tpoxx to treat smallpox in 2018, a disease that was eradicated in 1980. The reason governments have been buying up the treatment is as a bioterrorism precaution, in case someone uses smallpox as a bioweapon.

It may not be too late to invest in Siga, but it is risky

Monkeypox looks to be in its early stages, as case numbers have been rising. And the global reach of the disease certainly points to it as another potential problem for the world. It may not become a pandemic, but the need for treatment will likely remain high. And so I can see why the stock could continue to rise. But the danger is also high for investors because, as with COVID stocks, monkeypox stocks will likely be volatile depending on how troublesome the illness proves to be. 

Today, fears are growing about monkeypox, but if it turns out to be slow spreading, it may not lead to a significant surge in orders for Tpoxx. Siga has become a volatile stock due the outbreak of monkeypox, and unless you have a high risk tolerance, it's a stock you'll probably want to avoid.