(Bloomberg) — As health authorities around the world look for ways to stop an outbreak of monkeypox, investors are snapping up shares of companies that could benefit from the fight to contain the disease.
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Shares of vaccine makers, antiviral drug makers and protective gear makers are in demand as investors use a strategy that has delivered profits during the coronavirus pandemic. Biotech company Bavarian Nordic A/S and pharmaceutical company Siga Technologies Inc. is among the stocks in focus as well as medical instrument supplier Precision System Science Co.
Although nowhere near as serious as the Covid-19 outbreak, the spread of monkeypox infections to more than 70 countries in just a few months has prompted the World Health Organization to declare it a global emergency. This statement may give the trade an additional tailwind.
“Right now, the world is relying on one manufacturer, Bavarian Nordic, for the monkeypox vaccine,” said Manish Bhargava, fund manager at Straits Investment Holdings Pte in Singapore. “To keep up with demand, we can expect other biotech companies to step up research and production. It is starting to be reflected in the strong share price performance for the sector.”
Here are some industries and companies that were active:
Vaccines and Antivirals
Shares in Bavarian Nordic have more than tripled from lows in May after governments began ordering the Danish company’s smallpox vaccine – the only one approved specifically to prevent the infection. The company has raised its revenue guidance several times this year.
Analysts note, with Citigroup Inc. to increase its target price for the company’s stock by 20% and to indicate that there may be further upside if more orders are placed.
Shares of other companies that make vaccines or antiviral drugs for monkeypox have also caught the attention of U.S. retailers. The stock of Siga Technologies, which makes a treatment called Tpoxx, has doubled this year. The treatment is approved for the treatment of smallpox in the US and monkeypox and other viruses in the European Union and the United Kingdom.
Tembexa by Chimerix Inc. is an antidote used to treat smallpox, and the company said in May it would sell the drug to Emergent BioSolutions Inc. On the vaccine side, Emergent’s ACAM2000 is a smallpox vaccine that can be used in some cases against monkeypox.
Siga, Chimerix and Emergent are the “primary beneficiaries” of the WHO’s declaration that the monkeypox outbreak is a global emergency, according to Cowen Inc. analyst Boris Peaker.
“With increased resources available for contact tracing and testing in the EU and US, we expect the number of cases to increase significantly in the coming months, potentially leading to more supplies of countermeasures,” Peaker wrote in a note.
Japan has also begun studying smallpox vaccines as a way to prevent the spread of the epidemic, and that may be of interest to Meiji Holdings Co. as the KM Biologics unit produces a smallpox vaccine. Meiji Holdings has jumped 12% since June lows.
The Asian nation has a stockpile of smallpox vaccines, but the amount has not been disclosed as preparations for the Tpoxx rollout are underway, Citigroup analyst Hidemaru Yamaguchi wrote in a note.
Companies that provide virus testing kits and tools are also in the spotlight.
In Japan, shares of Precision System, which makes medical testing equipment, have nearly doubled since late June. Switzerland’s Roche said in May it had developed three test kits to help scientists detect monkeypox.
More than 30 companies in China have received EU certification for their monkeypox virus detection products, analysts at Jefferies Financial Group Inc., including Christopher Lui, wrote in a July 25 note. These include early companies such as Autobio Diagnostics Co., Shanghai ZJ Bio-Tech Co. and Daan Gene Co. Shanghai ZJ rose almost 40% in July.
Antigen and antibody test kit manufacturers such as Zhejiang Orient Gene Biotech Co. and Assure Tech (Hangzhou) Co. are the other potential beneficiaries.
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