What happened

SIGA Technologies (SIGA 1.34%), a pharmaceutical company that specializes in health security countermeasures against biological, chemical, radiological, and nuclear attacks, along with vaccines and therapies to treat emerging infectious diseases, saw its shares fall 31.7% in September, according to data from S&P Global Intelligence. The stock closed out August at $15.08, then fell to a low of $9.95 on Sept. 23. SIGA has a 52-week low of $5.84 and a 52-week high of $26.99. The stock is still up more than 35% this year.

So what

The company manufactures TPOXX (tecovirimat), a vaccine against monkeypox. On Sept. 19, the Food and Drug Administration (FDA) said that the vaccine, initially developed to prevent smallpox, should be restricted to only those patients with severe monkeypox disease or at high risk of severe cases of monkeypox, including people with weakened immune systems or skin conditions, such as eczema or HIV that is not virally suppressed.

The recommendation thus limits the target audience for the vaccine. On top of that, according to data from the Centers for Disease Control and Prevention (CDC), cases of monkeypox, after peaking at the end of August, have declined, which also could cut into TPOXX profits.

Now what

It's way too early to throw in the towel on SIGA, based on the stock's decline the past month. The company just received a procurement order for up to $10.7 million of the vaccine from the Department of Defense.

SIGA released its second-quarter report on Aug. 8, and through six months, the company reported revenue of $27.2 million, more than double the $13.5 million in revenue it had in the same period in 2021. The company also reported $0.02 in earnings per share through six months, compared to an EPS loss of $0.03 per share in the first six months of 2021.

The biggest problem for investors, though, is right now, TPOXX is the healthcare company's only product. If monkeypox cases continue to fall in the United States and elsewhere, the company will see revenue plummet.

However, the lesson from COVID-19 has also brought home the importance of having vaccine stockpiles, and TPOXX is effective against both smallpox and monkeypox. The U.S. government and other governments are more likely to turn to SIGA to maintain their vaccine stockpiles of TPOXX. Another lesson from COVID-19 is such viruses change over time, so TPOXX may have to be tweaked to keep up with new infections of monkeypox.