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Should Investors Buy Into Companies Developing Zika Virus Treatments?

By Todd Campbell and Kristine Harjes – Mar 8, 2016 at 8:08AM

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The Zika virus is a top healthcare concern globally, but investors might want to approach companies working on a Zika virus cure cautiously.

The number of Zika virus cases in the United States has eclipsed 100 and because the mosquito borne virus is associated with cases of rare birth defects and Guillain-Barré syndrome, a condition characterized by muscle weakness, the Zika virus is becoming one of the globe's most worrisome healthcare threats.

Curbing the Zika virus spread won't be easy, but that's not stopping Sanofi (SNY 0.78%)Inovio Pharmaceuticals (INO -1.95%), and Intrexon Corp (PGEN -4.95%) from trying. All three are working on Zika virus solutions. Will their efforts pay off for investors? Find out in this clip of Motley Fool's Industry Focus Healthcare.

A transcript follows the video.

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This podcast was recorded on March 2, 2016. 

Kristine Harjes: As investors, are there any names we can look to here to try to capitalize on this?

Todd Campbell: Developing vaccines is not easy. It can take a very long time. But there are a couple companies that have come out and said they're doing some early work on a vaccine for it--

Harjes: (laughs) Early being the key word.

Campbell: Yeah, early work. Sanofi is one, they have a very large presence in vaccines, about $5 billion in annual sales. They just are in the process of rolling out a vaccine for the dengue fever. And they think that, possibly, some of the lessons they've learned over the years can help them speed a vaccine along for this. Inovio Pharmaceuticals is another one. They have an interesting approach with a use a strand of DNA to craft a synthetic vaccine, if you will, that can be given to people in really early stage -- I mean, we're talking studies in mice--

Harjes: Not even human.

Campbell: --there was some positive efficacy. But, investors need to remember that, while money could get spent on this research, I think the administration was seeking $1.8 billion in funding, and some of that's going to be heading toward research, vaccines take years to develop. So, we're probably not going to see anything reaching the market and commercialization potential, if you will, for a while. 

Harjes: Yeah, the reaction to Inovio has been really interesting, because the stock has received a pretty substantial boost that seems to be tied to its work in developing a Zika vaccine, but they don't have a single product currently. And their pipeline has vaccines kind of all over the place, for cancers, flus, Zika, Ebola. But as you mentioned, the Zika one is still not in human trials. So, I'm not--

Campbell: Yeah, they're hoping for primates, (laughs) and then to human trials. I caution investors: whenever you hear something like, "Zika Zika Zika!" It makes you think, "Okay, who may be the first to market with something like this?" You don't want to get the cart too far ahead of the horse here. Inovio is working on some interesting stuff, but like you said, they've got nothing on the market yet. They got a similar pop in their share price when the Ebola scare was around, because they were working on an Ebola vaccine. But you'll notice that vaccine hasn't reached the market yet. So, temper that enthusiasm a little bit. If you're going to buy the stock, make sure you're not buying it because of the potential to create a Zika virus vaccine. That's why, for investors, maybe Sanofi makes more sense, because you've got a multi-national large drug company with a lot of different irons in the fire, there are reasons to own it other than what you'd see with Inovio.

Harjes: Now, what about Intrexon, where do they fit in?

Campbell: Well, they're an intriguing play, because theoretically, if you can engineer the DNA of a mosquito so that you're not reproducing mosquitoes that can transmit the virus, wouldn't that be great? I don't know whether or not Intrexon's going to end up turning whatever they can come up with into a commercial product that should drive investors to buy the stock. So, again, I think you have to temper the enthusiasm or optimism about coming up with a solution and getting it to market, and instead, own these companies based on their other irons in the fire, and if they're able to come up with something in Zika, that's great, great for people, doctors, and patients, and theoretically great for investors, but we're still so far away from that. Approach with caution.

Harjes: So, all told, don't worry too much about Zika virus, and don't get caught up in the hype of thinking it's a good investment, either.

Kristine Harjes has no position in any stocks mentioned. Todd Campbell has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Sanofi Stock Quote
$45.39 (0.78%) $0.35
Inovio Pharmaceuticals Stock Quote
Inovio Pharmaceuticals
$2.01 (-1.95%) $0.04
Precigen, Inc. Stock Quote
Precigen, Inc.
$1.92 (-4.95%) $0.10

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