Once a problem confined to just one continent, Monkeypox is spreading and threatens to become a global issue. Since the United Kingdom first reported a confirmed Monkeypox case on May 7, many more cases have been reported in countries where the virus hasn’t been originally known to be present. Nearly 800 cases have been detected so far, and investors are rightfully researching Monkeypox stocks to buy to position themselves for a potential upside during the second quarter of 2022.
According to the World Health Organization (WHO), Monkeypox is a rare viral disease similar to smallpox but considered clinically less severe. It has been endemic in West Africa and Central Africa. Since it’s a viral disease, vaccination is the best front-line defense. It is widely believed that Smallpox vaccines are adequate for Monkeypox immunity.
Unlike the Covid-19 scenario, when the world was vastly unprepared for a coronavirus outbreak, vaccines are already available for every American citizen should there be a Smallpox outbreak. The vast availability of smallpox vaccines that offer immunity to the Monkeypox virus should limit the upside for Monkeypox stocks in 2022.
However, the resurgence of the disease could activate routine vaccinations across the globe, and Monkeypox vaccine manufacturers could significantly benefit. Routine vaccination against smallpox stopped in 1972 in the United States when the disease was considered eradicated. An individual could require a vaccine once every three years if routine Smallpox/Monkeypox vaccination programs are reactivated.
In a recent Bloomberginterview on the sidelines of the World Economic Forum’s annual meeting in Davos, Moderna’s (NASDAQ:MRNA) CEO was quoted saying the scenario for Monkeypox developing into a pandemic is “close to zero percent.” I hope so, but his company is investigating potential vaccines for the virus. Countries globally are already placing huge orders on one of the Monkeypox vaccine producers identified below, and the company’s stock could continue to surge.
Monkeypox Stocks to Watch: SIGA Technologies Inc. (SIGA)
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SIGA Technologies (NASDAQ:SIGA) produces the Tecovirimat SIGA, or TPOXX smallpox vaccine as it’s known in the U.S., SIGA’s vaccine was approved in the United States for the treatment of smallpox in July 2018, and it received European approvals for the treatment of Smallpox, Monkeypox and Cowpox in January 2022.
Following a Monkeypox rally that saw SIGA stock price skyrocket between the first of May and May 27, shares are in consolidation mode after a 13% decline since May 27. Investors speculate on the company’s economic benefits from a potential Monkeypox outbreak, and any new vaccine orders could reignite the speculative rally this month.
Although it has been profitable historically, SIGA has a significantly volatile revenue history. That said, given its good working capital position, no debt in its capital structure and a positive free cash flow generation profile, SIGA stock could outperform if Monkeypox becomes a significant cause for concern enough for governments to increase orders for Tecovirimat and TPOXX.
Emergent BioSolutions Inc. (EBS)
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Emergent BioSolutions (NASDAQ:EBS) produces public health products and therapies for the government and health institutions. It manufactures the ACAM2000 vaccine, one of the only three Smallpox vaccines approved in the United States.
Most of EBS’s revenue and earnings come from U.S. government vaccine purchases, and the company could be one of the best Monkeypox stocks to rise if the virus’ spread goes exponential.
However, the U.S. government claims it has stockpiled enough smallpox vaccines to cover the whole population should there be an outbreak.
Most noteworthy, ACAM2000 is believed to cause severe side effects. It’s possible that a Monkeypox problem in 2022 may not exactly result in a surge in demand for the company’s vaccine.
Interestingly though, Emergent BioSolutions is in the process of acquiring a direct competitor’s smallpox vaccine, TEMBEXA, which was recently approved in 2021. After the acquisition deal, EBS stock will offer investors economic upside exposure to two of three approved Monkeypox vaccines in the United States.
That said, EBS stock has significantly underperformed the broader market during a market sell-off so far in 2022. Emergent BioSolutions is yet to shrug off investor concerns about its quality controls at production facilities after its $628 million Covid-19 vaccine contract was canceled by President Joe Biden’s Administration recently.
Monkeypox Stocks to Watch: Chimerix Inc. (CMRX)
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Chimerix Inc. (NASDAQ:CMRX) developed a smallpox drug, TEMBEXA, that received FDA approval in June last year. It’s currently a Strong Buy-rated biotech stock, but Chimerix stock sold off in May after news broke out that the company is selling its antiviral treatment for smallpox and Monkeypox to Emergent BioSolutions for $225 million, with a potential $100 million worth of milestone payments.
The company’s disposal of its Monkeypox drug assets spooked investors who believe the company has given away a potential cash cow that could have been valuable during a Monkeypox outbreak globally.
On the brighter side, Chimerix will receive 20% royalties on Emergent’s gross profit on U.S. sales of TEMBEXA if EBS sells more than 1.7 million treatment courses before exclusive patents expire, and 15% royalties on international sales.
Most noteworthy, Chimerix’s sale of its Monkeypox asset will boost its poor cash flow position and help finance its Phase 3 study on ONC201, a drug for the treatment of brain tumors.
Bavarian Nordic (BVNRY)
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Danish biotech firm Bavarian Nordic (OTCMKTS:BVNRY) produces a newer type of smallpox vaccine named Jynneos, a potentially safer alternative to Emergent BioSolutions’s ACAM2000 and Chimerix’s TEMBEXA vaccines, which can have severe side effects.
Bavarian Nordic’s smallpox vaccine is approved for smallpox and Monkeypox in the U.S. as JYNNEOS and in Canada as IMVAMUNE. The vaccine is approved in Europe as IMVANEX for smallpox, but has been previously provided for off-label use in Monkeypox cases.
The company is obtaining significantly large orders for its Monkeypox vaccine globally. Since receiving an order from a European government on May 19, Bavarian Nordic subsequently announced a significant contract on May 25 and a number of new contracts on May 30.
Subsequently, management increased the company’s revenue guidance for 2022 by 20% from 1,100-1,400 million DKK ($158-201 million) originally to 1,400-1,600 million DKK ($201-230 million) as Monkeypox vaccine orders accumulate. The company expects narrower losses for 2022 and its cash and cash equivalents guidance has been increased by 14% to 1,200-1,300 million DKK ($172-187 million) at year-end 2022.
The company says it is “ currently in dialogue with several other governments concerning supply of the vaccine to mitigate the current monkeypox outbreak and to explore opportunities for longer term collaboration to build stockpiles for future preparedness.”
There could be more Monkeypox orders in the pipeline.
Monkeypox Stocks to Watch: Abbott Laboratories (ABT)
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After reporting a strong 18% organic sales growth during the first quarter, and a 31% adjusted earnings growth, medical devices manufacturer Abbott Laboratories (NYSE:ABT) could see its business sustain double-digit growth rates into the future, and the latest Monkeypox outbreak could offer a new target market.
Abbott Laboratories is working on a polymerase chain reaction (PCR) test to detect the presence of Monkeypox. The company is busy developing a test for Monkeypox that could help the world in the early detection of the disease to contain its spread. It will provide test kits to partners in the Pandemic Defense Coalition (a network of scientific and public health partnerships to identify future pandemic threats).
Although Abbott’s diagnostics division has been the biggest revenue growth contributor accounting for 35% of sales growth in the first quarter of 2022, it’s too early to tell how big a market the PCR test for Monkeypox will become, so attaching a growth estimate from the Monkeypox market opportunity could be speculative guesswork.
That said, the company’s innovative heart health technology, leadership position in global diabetes care and multi-billion-dollar diagnostics unit all combine to generate huge profits and strong positive cash flow to support dividend growth and acquisitions.
Inovio Pharmaceuticals Inc. (INO)
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Inovio Pharmaceuticals Inc. (NASDAQ:INO) is a nano-cap biotechnology stock that could benefit if its smallpox vaccine ever finds its way into the mainstream licensed market. The small company developed a vaccine for smallpox and Monkeypox that showed impressive efficacy in non-human test subjects way back in 2010.
Claims that INO’s smallpox vaccine study offered 100% protection against smallpox in non-human primates could have made investors hopeful that perhaps the vaccine candidate could be worth something as Monkeypox becomes a topical threat to global health. Unfortunately, it appears that Inovio’s Smallpox studies were discontinued.
Nothing has become of Inovio’s pre-clinical vaccine candidate for smallpox and Monkeypox yet. That said, given the speed at which DNA vaccines can come to market, investor interest could be kindled if INO were to resume its Monkeypox and Smallpox vaccine studies.
INO stock has plummeted since the company lost the race to a Covid-19 vaccine and the U.S. government withdrew funding. Chances remain, though somewhat slim, for the company’s INO-4800 Covid-19 vaccine candidate to gain traction towards booster status if Covid-19 becomes an endemic disease.
Monkeypox Stocks to Watch: Tonix Pharmaceuticals Holdings Group (TNXP)
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Tonix Pharmaceuticals Holdings Corp. (NASDAQ:TNXP) is a clinical-stage biopharmaceutical company that is developing potential Smallpox and Monkeypox vaccines based on synthetic biology. The company recently announced the issuance of a U.S. patent for its preclinical-stage vaccine candidate, TNX-801, which could be effective in preventing Smallpox and Monkeypox.
The vaccine was developed in collaboration with the University of Alberta. The U.S patent should provide Tonix with local market exclusivity until 2037. TNX-801 may have lower side effects than current Monkeypox vaccines.
TNXP stock is a highly speculative play on Smallpox and Monkeypox vaccine upside. Although TNXP stock is rated a buy by three Wall Street analysts, the company is a pre-revenue stage pharma stock with no proven track record and an above-average investment risk profile.
Shares have lost 81% of their value so far this year.
On the date of publication, Brian Paradza did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.comPublishing Guidelines.
