Wuhan virus outbreak triggers inevitable small-biotech rally
Every few years, a public health crisis (think Ebola, Zika) spurred by a rogue pathogen triggers a small-biotech rally, as drugmakers emerge from the woodwork with ambitious plans to treat the mounting outbreak. In most cases, that enthusiasm never quite delivers.
Things are no different, as the coronavirus outbreak in Wuhan, China takes hold. There have been close to 300 confirmed human infections in China, and at least four deaths. Coronaviruses are a large family of viruses, which include MERS and SARS. On Tuesday, the CDC reported the virus was detected in a US traveler returning from Wuhan.
Shares of Maryland-based vaccine developer, Novavax, which has seen a steady stream of setbacks with its RSV vaccine and is currently in late-stage development with a flu vaccine, saw its shares $NVAX catapult on Tuesday — closing up more than 71% at $9.82. The company’s technology has also been used to develop experimental vaccines for MERS and SARS.
In an email to Endpoints News on Wednesday, the company said it expects to develop a vaccine candidate from the genetic sequence of the Wuhan coronavirus. The stock was down nearly 16% at $8.25 on Wednesday morning, after the drugmaker also disclosed plans to sell $100 million worth of shares in a public offering after the market closed on Tuesday.
Meanwhile, mRNA-focused Moderna also unveiled its plans on Wednesday. The company issued a statement saying it is working with NIH’s vaccine research center on a potential vaccine response to the current public health emergency. Shares of the Cambridge, Massachusets-based developer $MRNA — which pulled off a historic $604 million IPO in late 2018 — were up nearly 9% at 22.80.
“Markets tend to bottom with the peak in new cases and news flow,” JP Morgan analysts said, as cited by MarketWatch. “A positive bias is appropriate on pharma stocks broadly and makers of diagnostic kits and protective equipment (like gloves).”
Therapeutics will likely make the cut before vaccines do, Anthony Fauci, director of NIH’s National Institute of Allergy and Infectious Diseases (NIAID), suggested in an interview with BioCentury.
The agency plans to investigate the efficacy of existing antivirals and monoclonal antibodies, as well as develop a therapy using antibodies derived from blood drawn from a patient diagnosed in the state of Washington (the traveler) to fight the China coronavirus strain, he said in the report.
Other biotech stocks also rose as new coronavirus cases came to light.
Shares of a developer of nano-medicines for viral infections, NanoViricides, jumped more than 150% on Tuesday, but the shares $NNVC pared gains on Wednesday, falling more than 52% to $4.07. Aethlon Medical $AEMD, a device maker developing a hemopurifier to combat viral diseases, jumped more than 15% to $2.6. Shares of Inovio Pharmaceuticals $INO — which is working on a MERS vaccine — also ticked higher on Tuesday, although the stock was in the red on Wednesday. BioCryst Pharmaceuticals, which is developing a yellow fever and Marburg virus drug that has shown early promise in coronaviruses, also saw its shares $BCRX rise about 5.5% to $3.09 on Wednesday.
Maxim Jacobs, managing editor of investment research firm Edison, suggested the outcry over coronaviruses was misplaced.
Coronaviruses typically circulate among animals, such as camels, cats, and bats. Rarely, there is animal-to-person transmission, as is suspected in the Wuhan outbreak. Many patients afflicted in China were linked to a large seafood and animal market, although there are cases where patients were not exposed to the market at all, which suggests there is “limited person-to-person spread…though it’s unclear how easily or sustainably this virus is spreading between people,” the CDC said.